-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HnMMyNOtF6ExhPTqUsZiD7N6rnU/rPVPz9uH5HFeq51iTdQe8vV1WM5TFt0UHhAb WMpl7kkqvGaaYQBQNQLkxA== 0000807639-03-000004.txt : 20030630 0000807639-03-000004.hdr.sgml : 20030630 20030630131230 ACCESSION NUMBER: 0000807639-03-000004 CONFORMED SUBMISSION TYPE: N-CSR/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030430 FILED AS OF DATE: 20030630 EFFECTIVENESS DATE: 20030630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK JOHN INVESTMENT TRUST III CENTRAL INDEX KEY: 0000791271 STATE OF INCORPORATION: MA FISCAL YEAR END: 1030 FILING VALUES: FORM TYPE: N-CSR/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-04630 FILM NUMBER: 03763420 BUSINESS ADDRESS: STREET 1: 101 HUNTINGTON AVE CITY: BOSTON STATE: MA ZIP: 02199 BUSINESS PHONE: 6173751702 MAIL ADDRESS: STREET 1: 101 HUNTINGTON AVE CITY: BOSTON STATE: MA ZIP: 02199-7603 FORMER COMPANY: FORMER CONFORMED NAME: FREEDOM INVESTMENT TRUST II DATE OF NAME CHANGE: 19930831 N-CSR/A 1 amendedworld.txt JH WORLD FUND - AMENDED ITEM 1. REPORT TO STOCKHOLDERS. - -------------------------------------------------------------------------------- SEMI ANNUAL REPORT John Hancock European Equity Fund APRIL 30, 2003 - -------------------------------------------------------------------------------- John Hancock European Equity Fund Schedule of Investments April 30, 2003 (unaudited)
ISSUER SHARES VALUE - ------ ------ ----- COMMON STOCKS Austria (1.16%) Gericom AG (Computers) 3,800 $ 57,208 OMV AG (Oil & Gas) 500 60,041 ------------ 117,249 ------------ Belgium (1.12%) Interbrew SA (Beverages) 3,000 66,960 Mobistar SA* (Telecommunications) 1,400 45,622 ------------ 112,582 ------------ Denmark (1.42%) Jyske Bank AS* (Banks - Foreign) 2,400 78,285 TDC AS (Telecommunications) 2,600 64,681 ------------ 142,966 ------------ Finland (3.26%) Nokia Oyj American Depositary Receipts (ADR) (Telecommunications) 15,000 248,550 Sampo Oyj (A Shares) (Finance) 11,100 80,519 ------------ 329,069 ------------ France (6.03%) BNP Paribas SA (Banks - Foreign) 2,500 117,347 France Telecom SA (Telecommunications) 1,800 41,582 JC Decaux SA* (Advertising) 8,900 85,915 Pernod-Ricard SA (Beverages) 350 30,721 Suez SA (Pollution Control) 5,000 81,412 Unibail SA (Real Estate Operations) 900 60,214 Vinci SA (Engineering / R&D Services) 1,500 97,678 Vivendi Universal SA (Media) 5,700 92,873 ------------ 607,742 ------------ Germany (7.84%) BASF AG (Chemicals) 1,600 70,799 Continental AG* (Rubber - Tires & Misc) 3,100 55,007 Deutsche Boerse AG (Finance) 2,200 102,136 Deutsche Telekom AG (Telecommunications) 4,900 65,511 E.ON AG (Utilities) 2,100 99,603 Medion AG (Business Services - Misc) 1,900 70,185 Muenchener Rueckversicherungs-Gesellschaft AG (Insurance) 800 79,638 Schwarz Pharma AG (Medical) 2,500 107,136 SGL Carbon AG* (Chemicals) 3,500 51,364 Siemens AG (Diversified Operations) 1,800 88,990 ------------ 790,369 ------------ Hungary (0.64%) OTP Bank Rt. (Banks - Foreign) 6,000 64,417 ------------
See notes to financial statements. 1
ISSUER SHARES VALUE - ------ ------ ----- Ireland (2.19%) Bank of Ireland (Banks - Foreign) 10,500 $ 128,312 Irish Life & Permanent Plc (Finance) 8,000 92,799 ------------ 221,111 ------------ Israel (2.62%) Taro Pharmaceutical Industries Ltd.* (Medical) 2,000 91,520 Teva Pharmaceutical Industries Ltd. (ADR) (Medical) 3,700 172,790 ------------ 264,310 ------------ Italy (6.19%) Banco Popolare di Verona e Novara Scrl (Banks - Foreign) 4,600 62,476 ENI SpA (Oil & Gas) 7,100 101,184 ERG SpA (Oil & Gas) 5,100 22,653 Finmeccanica SpA (Aerospace) 88,000 52,247 Impregilo SpA* (Building) 175,000 74,214 Italcementi SpA (Building) 7,500 78,343 Mediaset SpA (Media) 6,300 53,856 Saipem SpA (Oil & Gas) 11,800 82,305 UniCredito Italiano SpA (Banks - Foreign) 22,100 96,681 ------------ 623,959 ------------ Netherlands (7.30%) Aegon NV (Insurance) 7,600 77,267 ASML Holding NV (NY Reg Shares)* (Electronics) 7,800 68,718 Euronext NV (Finance) 3,800 83,968 Fugro NV (Engineering / R&D Services) 1,300 52,736 IHC Caland NV (Oil & Gas) 800 41,292 ING Groep NV (Insurance) 6,400 103,922 Royal Dutch Petroleum Co. (Oil & Gas) 2,600 106,343 TPG NV (Transport) 6,900 107,651 Unilever NV (Food) 1,500 94,497 ------------ 736,394 ------------ Norway (1.09%) ProSafe ASA * (Oil & Gas) 3,200 53,960 Statoil ASA (Oil & Gas) 7,000 55,517 ------------ 109,477 ------------ Russia (2.16%) Lukoil (ADR) (Oil & Gas) 900 61,956 VimpelCom* (ADR) (Telecommunications) 1,700 67,762 YUKOS (ADR) (Oil & Gas) 500 87,750 ------------ 217,468 ------------ Spain (7.54%) Acciona SA (Building) 1,400 67,183 Acesa Infraestructuras SA (Transport) 4,000 52,005 Actividades de Construccion y Servicios SA (Building) 2,500 94,162 Banco Popular Espanol SA (Banks - Foreign) 1,600 77,566 Bankinter SA (Banks - Foreign) 2,500 76,362 Corporacion Mapfre SA (Insurance) 11,600 108,743 Endesa SA (Utilities) 8,600 121,985 Iberia Lineas Aereas de Espana SA (Transport) 27,300 47,833 Telefonica SA* (Telecommunications) 10,404 115,063 ------------ 760,902 ------------
See notes to financial statements. 2
ISSUER SHARES VALUE - ------ ------ ----- Sweden (3.00%) Elekta AB (B Shares)* (Medical) 7,900 $ 85,957 Hennes & Mauritz AB (B Shares) (Retail) 4,500 100,126 Skandinaviska Enskilda Banken AB (A Shares) (Banks - Foreign) 11,200 116,386 ------------ 302,469 ------------ Switzerland (6.62%) Actelion Ltd.* (Medical) 1,200 76,841 Converium Holding AG* (Insurance) 1,000 45,160 Credit Suisse Group (Banks - Foreign) 5,000 119,443 Novartis AG (Medical) 3,841 151,510 Roche Holding AG (Medical) 1,700 108,169 SGS Societe Generale de Surveillance Holding SA (Business Services - Misc) 150 52,477 UBS AG (Banks - Foreign) 2,400 113,869 ------------ 667,469 ------------ United Kingdom (34.76%) Acambis Plc* (Medical) 12,400 56,483 Arriva Plc (Transport) 13,000 66,591 AstraZeneca Plc (Medical) 3,400 133,407 Barclays Plc (Banks - Foreign) 20,798 143,683 BG Group Plc (Oil & Gas) 10,600 42,396 BHP Billiton Plc (Metal) 16,912 86,495 BP Plc (Oil & Gas) 17,500 110,899 British Sky Broadcasting Group Plc* (Media) 9,300 96,392 Diageo Plc (Beverages) 12,300 136,431 Gallaher Group Plc (Tobacco) 16,300 154,356 GlaxoSmithKline Plc (Medical) 12,300 246,519 HBOS Plc (Banks - Foreign) 11,800 138,240 Imperial Tobacco Group Plc (Tobacco) 4,300 71,955 InterContinental Hotels Group Plc* (Leisure) 6,949 42,204 Kelda Group Plc (Utilities) 15,000 98,653 Kingfisher Plc (Retail) 14,000 54,708 Lloyds TSB Group Plc (Banks - Foreign) 14,900 97,995 Man Group Plc (Finance) 8,000 134,893 Mitchells & Butler Plc* (Retail) 6,949 23,545 mm02 Plc* (Telecommunications) 109,000 97,122 National Grid Transco Plc (Utilities) 25,100 164,878 Northern Rock Plc (Banks - Foreign) 5,700 65,183 Peninsular and Oriental Steam Navigation Co. (Transport) 28,300 87,295 Reckitt Benckiser Plc (Soap & Cleaning Preparations) 3,300 58,201 Royal Bank of Scotland Group Plc (Banks - Foreign) 8,892 233,215 Severn Trent Plc (Utilities) 6,000 68,565 SkyePharma Plc* (Medical) 93,000 73,576 Smith & Nephew Plc (Medical) 9,600 64,020 Smiths Group Plc (Manufacturing) 4,200 44,908 Tesco Plc (Retail) 27,700 87,658 Tullow Oil Plc* (Oil & Gas) 67,700 74,735 Vodafone Group Plc (Telecommunications) 200,000 394,769 Wood Group (John) Plc (Oil & Gas) 22,500 56,009 ------------ 3,505,979 ------------
See notes to financial statements. 3
ISSUER SHARES VALUE - ------ ------ ----- United States (0.99%) Schlumberger Ltd. (Oil & Gas) 1,600 $ 67,088 Transocean, Inc. (Oil & Gas) 1,700 32,385 ------------ 99,473 ------------ TOTAL COMMON STOCKS (95.93%) (Cost $8,729,378) 9,673,405 ------------ PREFERRED STOCKS Germany (2.41%) Henkel KGaA (Chemicals) 800 51,514 Porsche AG (Automobiles / Trucks) 200 72,763 Wella AG (Cosmetics & Personal Care) 1,600 118,563 ------------ 242,840 ------------ TOTAL PREFERRED STOCKS (2.41%) (Cost $206,151) 242,840 ------------ RIGHTS Netherlands (0.05%) Aegon NV* (Insurance) 13,300 5,409 ------------ TOTAL RIGHTS (0.05%) (Cost $0) 5,409 ------------ TOTAL INVESTMENTS (98.39%) 9,921,654 ------------ (Cost $8,935,529) OTHER ASSETS AND LIABILITIES, NET (1.61%) 162,382 ------------ TOTAL NET ASSETS (100.00%) $ 10,084,036 ============
* Non-income producing security. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements. 4 Portfolio Concentration (unaudited) This table shows the percentages of the Fund's investments aggregated by various industries as of April 30, 2003. VALUE AS A PERCENTAGE INVESTMENT CATEGORIES OF NET ASSETS - --------------------- ------------- Advertising 0.85% Aerospace 0.52 Automobiles / Trucks 0.72 Banks - Foreign 17.15 Beverages 2.32 Building 3.11 Business Services - Misc 1.22 Chemicals 1.72 Computers 0.57 Cosmetics & Personal Care 1.18 Diversified Operations 0.88 Electronics 0.68 Engineering / R&D Services 1.49 Finance 4.90 Food 0.94 Insurance 4.17 Leisure 0.42 Manufacturing 0.45 Media 2.41 Medical 13.56 Metal 0.86 Oil & Gas 10.47 Pollution Control 0.81 Real Estate Operations 0.60 Retail 2.64 Rubber - Tires & Misc 0.55 Soap & Cleaning Preparations 0.58 Telecommunications 11.31 Tobacco 2.24 Transport 3.58 Utilities 5.49 ----- Total investments 98.39% ===== See notes to financial statements. 5 John Hancock European Equity Fund ASSETS AND ASSETS LIABILITIES Investments at value (cost - $8,935,529) $ 9,921,654 April 30, 2003 Foreign cash at value (cost - $1,657) 1,657 (unaudited) Receivable for investments sold 1,041,340 Dividends and interest receivable 76,897 Receivable from affiliates 3,650 Other assets 617 Total assets 11,045,815 LIABILITIES Due to custodian 697,804 Payable for investments purchased 242,587 Payable for shares repurchased 760 Other payables and accrued expenses 20,628 Total liabilities 961,779 NET ASSETS Capital paid-in 18,732,639 Accumulated net realized loss on investments, options and foreign currency transactions (9,643,855) Net unrealized appreciation of investments and translation of assets and liabilities in foreign currencies 997,476 Accumulated net investment loss (2,224) Net assets $ 10,084,036 NET ASET VALUE PER SHARE Based on net asset values and shares outstanding Class A ( $4,559,323 / 667,629 shares) $ 6.83 Class B ( $5,289,823 / 801,603 shares) $ 6.60 Class C ( $234,890 / 35,589 shares) $ 6.60 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ( $ / 95% 6.83 ) $ 7.19 Class C ( $ / 99% 6.60 ) $ 6.67
(1) On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. 6 John Hancock European Equity Fund OPERATIONS INVESTMENT INCOME For the period ended Dividends (net of foreign witholding taxes of $15,510) $ 117,512 April 30, 2003 Interest 2,301 (unaudited) (1) Total investment income 119,813 EXPENSES Investment management fee 48,622 Class A distribution and service fee 7,976 Class B distribution and service fee 26,268 Class C distribution and service fee 1,170 Transfer agent fee 49,481 Custodian fee 23,103 Registration and filing fee 22,806 Printing 14,791 Auditing fee 2,382 Accounting and legal services fee 1,448 Trustee's fee 571 Miscellaneous 217 Total expenses 198,835 Less expense reductions (76,982) Net expenses 121,853 Net investment loss (2,040) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on Investments (865,543) Foreign currency transactions (18,055) Options 6,652 Change in unrealized appreciation (depreciation) on Investments 1,468,917 Translation of assets and liabilities in foreign currencies 10,569 Net realized and unrealized gain 602,540 Increase in net assets from operations $ 600,500
(1) Semiannual period from 11-1-02 through 4-30-03. See notes to financial statements. 7 John Hancock European Equity Fund
YEAR ENDED PERIOD ENDED 10-31-02 4-30-03 (1) CHANGES IN INCREASE (DECREASE) IN NET ASSETS NET ASSETS From operations Net investment loss $ (66,022) $ (2,040) Net realized loss (3,026,167) (876,946) Change in net unrealized appreciation (depreciation) 482,764 1,479,486 Increase (decrease) in net assets resulting from operations (2,609,425) 600,500 From Fund share transactions (2,487,052) (1,964,964) NET ASSETS Beginning of period 16,544,977 11,448,500 End of period (2) $11,448,500 $ 10,084,036
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited. (2) Includes accumulated net investment loss of $184 and $2,224 respectively. See notes to financial statements. 8 John Hancock European Equity Fund Financial Highlights CLASS A SHARES
PERIOD ENDED 10-31-98(1) 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $10.07 $11.16 $10.98 $7.80 $6.44 Net investment income (loss) (3) 0.01 (0.04) (0.06) --(4) (0.01) 0.01 Net realized and unrealized gain (loss) on investments 0.06 1.13 (0.12) (3.18) (1.35) 0.38 Total from investment operations 0.07 1.09 (0.18) (3.18) (1.36) 0.39 Net asset value, end of period $10.07 $11.16 $10.98 $7.80 $6.44 $6.83 Total return (5,6) (%) 0.70(7) 10.82 (1.61) (28.96) (17.44) 6.06(7) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $12 $14 $13 $8 $6 $5 Ratio of expenses to average net assets (%) 1.90 8 1.90 1.90 1.90 1.90 1.90(8) Ratio of adjusted expenses to average net assets (9) (%) 3.31(8) 2.23 2.30 3.02 2.65 3.32(8) Ratio of net investment income (loss) to average net assets (%) 0.16(8) (0.38) (0.52) 0.03 (0.08) 0.32(8) Portfolio turnover (%) 31 64 97 260 198 83
See notes to financial statements. 9 John Hancock European Equity Fund Financial Highlights CLASS B SHARES
PERIOD ENDED 10-31-98(1) 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $11.07 $10.04 $11.06 $10.80 $7.62 $6.24 Net investment loss(3) (0.04) (0.12) (0.15) (0.06) (0.06) (0.01) Net realized and unrealized gain (loss) on investments (0.99) 1.14 (0.11) (3.12) (1.32) 0.37 Total from investment operations (1.03) 1.02 (0.26) (3.18) (1.38) 0.36 Net asset value, end of period $10.04 $11.06 $10.80 $7.62 $6.24 $6.60 Total return (5,6) (%) (9.30)(7) 10.16 (2.35) (29.44) (18.11) 5.77(7) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $16 $15 $15 $8 $6 $5 Ratio of expenses to average net assets (%) 2.60(8) 2.60 2.60 2.60 2.60 2.60(8) Ratio of adjusted expenses to average net assets (9) (%) 4.01(8) 2.93 3.00 3.72 3.35 4.02 Ratio of net investment loss to average net assets (%) (1.12)(8) (1.08) (1.23) (0.67) (0.78) (0.39)(8) Portfolio turnover (%) 31 64 97 260 198 83
See notes to financial statements. 10 John Hancock European Equity Fund Financial Highlights CLASS C SHARES
PERIOD ENDED 10-31-99(1) 10-31-00 10-31-01 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.64 $11.06 $10.80 $7.62 $6.24 Net investment loss(3) (0.07) (0.13) (0.06) (0.06) (0.01) Net realized and unrealized gain (loss) on investments 0.49 (0.13) (3.12) (1.32) 0.37 Total from investment operations 0.42 (0.26) (3.18) (1.38) 0.36 Net asset value, end of period $11.06 $10.80 $7.62 $6.24 $6.60 Total return(5,6)(%) 3.95(7) (2.35) (29.44) (18.11) 5.77(7) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) --(10) --(10) --(10) --(10) --(10) Ratio of expenses to average net assets (%) 2.60(8) 2.60 2.60 2.60 2.60(8) Ratio of adjusted expenses to average net assets(9)(%) 2.93(8) 3.00 3.72 3.35 4.02(8) Ratio of net investment loss to average net assets (%) (1.17)(8) (1.16) (0.61) (0.78) (0.36)(8) Portfolio turnover(%) 64 97 260 198 83 (1) Class A, Class B and Class C shares began operations on 3-2-98, 6-1-98 and 3-1-99, respectively. (2) Semiannual period from 11-1-02 through 4-30-03. Unaudited (3) Based on the average of the shares outstanding. (4) Less than $0.01 per share. (5) Assumes dividend reinvestment and does not reflect the effect of sales charges. (6) Total returns would have been lower had certain expenses not been reduced during the periods shown. (7) Not annualized. (8) Annualized. (9) Does not take into consideration expense reductions during the periods shown. (10) Less than $500,000.
See notes to financial statements. 11 NOTES TO FINANCIAL STATEMENTS Unaudited NOTE A Accounting policies John Hancock European Equity Fund (the "Fund") is a diversified series of John Hancock World Fund, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to achieve long-term capital growth. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B and Class C shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or, if quotations are not readily available, or the value has been materially affected by events occurring after the closing of a foreign market, at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. All portfolio transactions initially expressed in terms of foreign currencies have been translated into U.S. dollars as described in "Foreign currency translation" below. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times. Foreign currency translation All assets or liabilities initially expressed in terms of foreign currencies are translated into U.S. dollars based on London currency exchange quotations as of 5:00 P.M., London time, on the date of any determination of the net asset value of the Fund. Transactions affecting statement of operations accounts and net realized gain (loss) on investments are translated at the rates prevailing at the dates of the transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes 12 in the value of assets and liabilities, other than investments in securities, resulting from changes in the exchange rates. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Capital gains realized on some foreign securities are subject to foreign taxes, which are accrued as applicable. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net assets of the respective classes. Distribution and service fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rate(s) applicable to each class. Expenses The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. Bank borrowings The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into a syndicated line of credit agreement with various banks. This agreement enables the Fund to participate with other funds managed by the Adviser in an unsecured line of credit with banks, which permits borrowings of up to $250 million, collectively. Interest is charged to each fund, based on its borrowing. In addition, a commitment fee is charged to each fund based on the average daily unused portion of the line of credit and is allocated among the participating funds. The Fund had no borrowing activity under the line of credit during the period ended April 30, 2003. Options The Fund may enter into option contracts. Listed options will be valued at the last quoted sales price on the exchange on which they are primarily traded. Over-the-counter options are valued at the mean between the last bid and asked prices. Upon the writing of a call or put option, an amount equal to the premium received by the Fund will be included in the Statement of Assets and Liabilities as an asset and corresponding liability. The amount of the liability will be subsequently marked to market to reflect the current market value of the written option. The Fund may use option contracts to manage its exposure to the price volatility of financial instruments. Writing puts and buying calls will tend to increase the Fund's exposure to the underlying instrument and buying puts and writing calls will tend to decrease the Fund's exposure to the underlying instrument, or hedge other Fund investments. The maximum exposure to loss for any purchased options will be limited to the premium initially paid for the option. In all other cases, the face (or "notional") amount of each contract at value will reflect the maximum exposure of the Fund in these contracts, but the actual exposure will be limited to the change in value of the contract over the period the contract remains open. Risks may also arise if counterparties do not perform under the contracts' terms ("credit risk") or if the Fund is unable to offset a contract with a counterparty on a timely basis ("liquidity risk"). Exchange-traded options have minimal credit risk as the exchanges act as counterparties to each transaction, and only present liquidity risk in highly unusual market conditions. To minimize credit 13 and liquidity risks in over-the-counter option contracts, the Fund will continuously monitor the creditworthiness of all its counterparties. At any particular time, except for purchased options, market or credit risk may involve amounts in excess of those reflected in the Fund's Statement of Assets and Liabilities. The Fund had no written option transactions during the period ended April 30, 2003. Forward foreign currency exchange contracts The Fund may enter into forward foreign currency exchange contracts as a hedge against the effect of fluctuations in currency exchange rates. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date at a set price. The aggregate principal amounts of the contracts are marked to market daily at the applicable foreign currency exchange rates. Any resulting unrealized gains and losses are included in the determination of the Fund's daily net assets. The Fund records realized gains and losses at the time the forward foreign currency exchange contracts are closed out. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. These contracts involve market or credit risk in excess of the unrealized gain or loss reflected in the Fund's Statement of Assets and Liabilities. The Fund may also purchase and sell forward contracts to facilitate the settlement of foreign currency denominated portfolio transactions, under which it intends to take delivery of the foreign currency. Such contracts normally involve no market risk if they are offset by the currency amount of the underlying transactions. The Fund had no open forward foreign currency exchange contracts on April 30, 2003. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $8,741,298 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carryforward expires as follows: October 31, 2006, -- $821,474, October 31, 2007 -- $1,234,369, October 31, 2009 - --$3,678,367 and October 31, 2010 - $3,007,088. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in 14 determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a monthly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.90% of the first $500,000,000 of the Fund's average daily net asset value and (b) 0.70% of the Fund's average daily net asset value in excess of $500,000,000. The Adviser has a subadvisory agreement with Nicholas-Applegate Capital Management LP. The Fund is not responsible for payment of the subadvisory fees. The Adviser has agreed to limit the Fund's total expenses to 1.90%, 2.60% and 2.60% of the Fund's average daily net assets attributable to Class A, Class B and Class C shares, respectively. Accordingly, the expense reduction amounted to $76,982 for the period ended April 30, 2003. The Adviser reserves the right to terminate this limitation in the future. The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net assets and 1.00% of Class B and Class C average daily net assets. A maximum of 0.25% of such payments may be service fees as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Class A and Class C shares are assessed up-front sales charges. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $3,447 with regard to sales of Class A shares. Of this amount, $387 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $2,340 was paid as sales commissions to unrelated broker-dealers and $720 was paid as sales commissions to sales personnel of Signator Investors, Inc. ("Signator Investors"), a related broker-dealer. The Adviser's indirect parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect sole shareholder of Signator Investors. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $62 with regard to sales of Class C shares, all of which was paid as sales commissions to unrelated broker-dealers. Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used in whole or in part to defray its expenses for providing distribution related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2003, CDSCs received by JH Funds amounted to $8,338 for Class B shares and none for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the Fund's average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses. 15 The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.03% of the average net assets of the Fund. The Adviser and other subsidiaries of JHLICo owned 150,000 shares of beneficial interest of the Fund on April 30, 2003. Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund's deferred compensation liability are recorded on the Fund's books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investment as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund. Note C Fund share transactions YEAR ENDED 10-31-02 PERIOD ENDED 4-30-03 (1) SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 243,515 $1,801,403 42,385 $272,540 Repurchased (359,333) (2,672,712) (248,077) (1,644,807) Net decrease (115,818) ($871,309) (205,692) ($1,372,267) CLASS B SHARES Sold 146,815 $1,075,119 33,891 $211,487 Repurchased (368,071) (2,672,695) (126,022) (777,870) Net decrease (221,256) ($1,597,576) (92,131) ($566,383) CLASS C SHARES Sold 113,551 $805,510 998 $6,153 Repurchased (117,426) (823,677) (5,158) (32,467) Net decrease (3,875) ($18,167) (4,160) ($26,314) NET DECREASE (340,949) ($2,487,052) (301,983) ($1,964,964) (1) Semiannual period from 11-1-02 through 4-30-03. Unaudited. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2003, aggregated $8,784,120 and $10,271,665, respectively. 16 The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $8,945,637. Gross unrealized appreciation and depreciation of investments aggregated $1,112,730 and $136,713, respectively, resulting in net unrealized appreciation of $976,017. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on certain forward foreign currency contracts. NOTE E Proposed reorganization On November 19, 2002, the Trustees approved the reorganization of John Hancock European Equity Fund and John Hancock Global Fund into John Hancock International Fund, subject to approval by shareholders. 17 John Hancock Funds Trustees Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove John M. DeCiccio Richard A. Farrell Maureen R. Ford William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt * Members of the Audit Committee Officers Maureen R. Ford Chairman, President and Chief Executive Officer William L. Braman Executive Vice President and Chief Investment Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer Thomas H. Connors Vice President and Compliance Officer Investment Adviser John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 Custodian The Bank of New York One Wall Street New York, New York 10286 Principal Distributor John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 Sub-Investment Adviser Nicholas-Applegate Capital Management 600 West Broadway San Diego, California 92101 Transfer Agent John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 Legal Counsel Hale and Dorr 60 State Street Boston, Massachusetts 02109-1803 - -------------------------------------------------------------------------------- John Hancock Biotechnology FUND SEMI ANNUAL REPORT 4.30.03 Sign up for electronic delivery at www.jhancock.com/funds/edelivery [LOGO] John Hancock - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [A photo of Maureen R. Ford, Chairman and Chief Executive Officer, flush left next to first paragraph.] - -------------------------------------------------------------------------------- Table of contents - ----------------------------- Your fund at a glance page 1 - ----------------------------- Manager's report page 2 - ----------------------------- A look at performance page 6 - ----------------------------- Growth of $10,000 page 7 - ----------------------------- Fund's investments page 8 - ----------------------------- Financial statements page 10 - ----------------------------- For your information page 21 - ----------------------------- Dear Fellow Shareholders, After a strong start to 2003, the stock market succumbed to the pressures of a weak economy, rising oil prices, concerns about corporate earnings and uncertainties about the war in Iraq. The tide turned in April, when the war ended and first-quarter corporate earnings came in better than expected. As a result, the major indexes all gained some ground year to date through April 30, 2003, with the Dow Jones Industrial Average returning 2.50%, the Standard & Poor's 500 Index returning 4.82% and the tech-heavy Nasdaq Composite Index up 9.64%. Bonds, which have outperformed stocks for the last three years, continued their upward trend this year, as investors still sought their relative safety. After the jarring stock market losses of the last three years, it's a relief for investors to be reminded that the market is indeed cyclical, and does eventually move up - not just down. But while the stock market has been clawing its way back, the ride has been extremely volatile. Uncertainty still abounds about the strength of the economy, geopolitical issues, corporate governance problems, rising unemployment and the sustainability of corporate earnings growth. And despite rallies late last year and in April, many investors are still so bruised and skeptical that they have remained on the sidelines. Even though the statistics suggest we might be emerging from this long, difficult bear market, we're not quite ready to call it history. While no one can predict when this bear market cycle will turn, investors can take charge of how they maneuver through such uncertain times. First, take a look at how your portfolio is allocated among stocks, bonds and cash to make sure it's in the proper balance. Work with your investment professional, who knows your long-term goals and can help keep you on the right track, rather than being lured by today's stars, which could wind up tomorrow's laggards. And as always, keep a long-term investment horizon. We believe this offers the best way for you to survive the tough times and reach your investment objectives. Sincerely, /s/Maureen R. Ford, - ------------------- Chairman and Chief Executive Officer This commentary reflects the chairman's views as of April 30, 2003. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term capital appreciation by investing primarily in stocks of U.S. and foreign companies principally engaged in the research, development and manufacture of various biotechnology products, services and processes. Over the last six months [ ] Biotechnology stocks rebounded modestly during the period, as regulatory conditions seemingly turned more favorable. [ ] The Fund benefited from its holdings in some of the industry's best-known biotech companies, as investors warmed to the sector. [ ] Holdings in suppliers to the biotech industry faltered due to declining spending by their customers. - -------------------------------------------------------------------------------- [Bar chart with heading "John Hancock Biotechnology Fund". Under the heading is a note that reads "Fund performance for the six months ended April 30, 2003." The chart is scaled in increments of 0% with 0.0% at the bottom and 1.0% at the top. The first bar represents the 0.54% total return for Class A. The second bar represents the 0.18% total return for Class B. The third bar represents the 0.18% total return for Class C. A note below the chart reads "Total returns for the Fund are at net asset value with all distributions reinvested."] - -------------------------------------------------------------------------------- Top 10 holdings 12.0% Amgen, Inc. 5.4% Genzyme Corp. 5.1% Genentech, Inc. 4.3% Gilead Sciences, Inc. 4.2% Neurocrine Biosciences, Inc. 4.2% MedImmune, Inc. 4.0% IDEC Pharmaceuticals Corp. 3.7% Trimeris, Inc. 3.3% ICOS Corp. 3.2% Serona SA As a percentage of net assets on April 30, 2003. 1 BY LINDA I. MILLER, CFA, PORTFOLIO MANAGER John Hancock Biotechnology Fund MANAGER'S REPORT The biotechnology stock sector posted positive returns during the six months ended April 30, 2003, a welcome relief after its disappointing losses in the previous year. During the period, investors seemingly became more optimistic - albeit cautiously so - about the group, buoyed by a number of favorable developments. More drugs were put into clinical trials, which underscored the longer-term promise of this industry. In addition, large pharmaceutical companies continued to pay a premium for innovative new therapies, scooping up small biotech firms in the process. In another positive development, a spate of FDA approvals seemingly signaled an effective agenda on the part of the new commissioner of that agency. And a number of biotechnology companies reported revenue and earnings gains that exceeded investor expectations. Against that backdrop, large, well-established biotech companies tended to outperform smaller, more speculative ventures. "The biotechnology stock sector posted a positive return..." PERFORMANCE AND STRATEGY REVIEW For the six months ended April 30, 2003, John Hancock Biotechnology Fund's Class A, Class B and Class C shares posted total returns of 0.54%, 0.18% and 0.18%, respectively, at net asset value. During the same period, the more broadly diversified average health/biotechnology fund had a total return of 4.99%, according to Lipper, Inc.1, while the Standard & Poor's 500 Index returned 4.47%. Keep in mind that your net asset value return will be different from the Fund's performance if you were not invested in the Fund for the entire period and did not reinvest all distributions. See pages six and seven for historical performance results. While we were gratified that the biotechnology sector showed renewed signs of life during the past six months, our stock 2 - -------------------------------------------------------------------------------- [A photo of Linda Miller flush right next to first paragraph.] - -------------------------------------------------------------------------------- selection worked against us during the period. Additionally, our investment focus on the narrow biotech sector may have curtailed our performance relative to our peers. Other funds in the peer group had broader investment parameters, giving them the ability to venture into better-performing health-care industry groups. LEADERS AND LAGGARDS Our largest holding was also one of the best performers. Amgen, the world's largest biotechnology company, enjoyed significantly higher sales and earnings. It benefited from its 2002 acquisition of Immunex, which gave it the arthritis drug Enbrel. Higher sales of anemia treatments Epogen and Aranesp, and drugs for boosting the immune systems of chemotherapy patients also helped. According to the company, another factor working in its favor was its ability to fill prescriptions for thousands of patients on a waiting list, thanks to increased manufacturing capacity. Another large holding that boosted performance was Genzyme, helped by the expected FDA approval of two new drugs used to treat rare genetic disorders, as well as its ability to correct problems with supplies of existing drugs. Another winner was MedImmune, helped in part by the excitement generated by the company's expected introduction before the next flu season of a product called FluMist. This nasal spray influenza vaccine is considered by many users to be a more pleasant alternative to a flu shot. The company's existing products, particularly Synagis, used to treat premature infants at risk for respiratory distress, continued to gain wide acceptance by the medical community. Our holdings in Scios also posted attractive gains, in part because it "Suppliers to the biotech industry generally disappointed us during the period." 3 was purchased by health-care giant Johnson & Johnson, which was attracted to Scios partly due to the company's experimental rheumatoid arthritis drug. Scios also enjoyed success from its congestive heart failure drug, which is in the process of early acceptance by hospitals. SPENDING SLOWDOWN HURTS SUPPLIERS Suppliers to the biotech industry generally disappointed us during the period. Many of these companies' earnings and revenues fell short of expectations due to cautious spending in the academic, pharmaceutical and biotech industries. Companies that were negatively affected by this trend included Affymetrix, - -------------------------------------------------------------------------------- [Pie chart at middle of page with heading "Portfolio diversification As a percentage of net assets on 4-30-03." The chart is divided into two sections (from top to left): Common stocks 96%, and Short-term investments and other 4%.] - -------------------------------------------------------------------------------- which makes chips used for genetic research; Albany Molecular Research, a drug research and development company; and Charles River Laboratories, which provides research tools and support that enable drug discovery and development. Enzon, a biopharmaceutical company that develops, manufactures and markets therapies for life-threatening diseases, was also a disappointment mainly because investors tended to view with some skepticism the company's proposed merger with another biotech company. 4 - -------------------------------------------------------------------------------- [Table at top of page entitled "SCORECARD". The header for the left column is "INVESTMENT" and the header for the right column is "PERIOD'S PERFORMANCE...AND WHAT'S BEHIND THE NUMBERS." The first listing is Amgen followed by an up arrow with the phrase "Strong demand for company's products." The second listing is MedImmune followed by an up arrow with the phrase "Investors anticipate approval of nasal spray vaccine." The third listing is Affymetrix followed by an up arrow with the phrase "Supplier suffers as drug, biotech companies curtail spending."] - -------------------------------------------------------------------------------- OUTLOOK In our opinion, it's quite likely that the biotech group will continue to face some challenges in 2003, which may mean that the group will experience more volatility. There are always ongoing hurdles for the group, such as the risks involved in new product development; the rising costs of research, development, manufacturing and sales; and the weaker financial condition of payers for health care around the world. That said, we believe that there are things working in the group's longer-term favor, specifically the fact that as we live longer lives, we will require more and more health-care services and new biotech products. As a growing number of people enter their mature years, new scientific developments and improved efficiencies could serve as a catalyst for continued growth of the biotechnology sector. "...we believe that there are things working in the group's longer-term favor..." This commentary reflects the views of the portfolio manager through the end of the Fund's period discussed in this report. The manager's statements reflect her own opinions. As such, they are in no way guarantees of future events, and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant. Sector investing is subject to greater risks than the market as a whole. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. 5 A LOOK AT PERFORMANCE For the period ended April 30, 2003 The index used for comparison is the Standard & Poor's 500 Index, Index 1, an unmanaged index that includes 500 widely traded common stocks. Also shown on page 7 is the Nasdaq Biotechnology Index, Index 2, an unmanaged index that represents the largest and most actively traded Nasdaq biotechnology stocks. It is not possible to invest in an index. Class A Class B Class C Index Inception date 3-1-01 3-1-01 3-1-01 - - -------------------------------------------------------------------------------- Average annual returns with maximum sales charge (POP) - -------------------------------------------------------------------------------- One year -23.35% -23.94% -21.54% -13.30% Since inception -25.39% -25.20% -24.48% -11.71% - -------------------------------------------------------------------------------- Cumulative total returns with maximum sales charge (POP) - -------------------------------------------------------------------------------- Six months -4.45% -4.82% -1.89% 4.47% One year -23.35% -23.94% -21.54% -13.30% Since inception -46.95% -46.65% -45.54% -23.62% Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5% and Class C shares of 1%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. The return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than the original cost. The returns reflect past results and should not be considered indicative of future performance. The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Fund's performance results reflect any applicable expense reductions, without which the expenses would increase and results would have been less favorable. These reductions can be terminated in the future. See the prospectus for details. 6 GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in the two indexes described on page 6. - -------------------------------------------------------------------------------- Line chart with the heading "GROWTH OF $10,000." Within the chart are four lines. The first line represents Index 1 and is equal to $7,638 as of April 30, 2003. The second line represents Index 2 and is equal to $5,966 as of April 30, 2003. The third line represents the value of the hypothetical $10,000 investment made in the John Hancock Biotechnology Fund, before sales charge, and is equal to $5,586 as of April 30, 2003. The fourth line represents the value of the same hypothetical $10,000 investment made in the John Hancock Biotechnology Fund, after sales charge, and is equal to $5,305 as of April 30, 2003. - -------------------------------------------------------------------------------- Assuming all distributions were reinvested for the period indicated, the table above shows the value of a $10,000 investment in the Fund's Class B and Class C shares, respectively, as of April 30, 2003. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes. 1 No contingent deferred sales charge applicable. 7 FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on April 30, 2003 (unaudited) This schedule is divided into two main categories: common stocks and short-term investments. Common stocks are further broken down by industry group. Short-term investments, which represent the Fund's cash position, are listed last. SHARES ISSUER VALUE - -------------------------------------------------------------------------------- COMMON STOCKS 95.60% $9,291,135 - -------------------------------------------------------------------------------- (Cost $9,277,439) Biotechnology 95.60% 9,291,135 31,000 Abgenix, Inc.* 294,500 13,554 Adolor Corp.*+ 189,620 6,500 Affymetrix, Inc.*+ 120,575 19,000 Amgen, Inc.* 1,164,890 10,000 Amylin Pharmaceuticals, Inc.*+ 191,500 5,000 Biogen, Inc.* 189,950 12,000 BioMarin Pharmaceutical, Inc.* 131,760 11,500 Celgene Corp.* 306,015 7,500 Cephalon, Inc.*+ 306,300 3,500 Chiron Corp.* 142,905 5,000 CV Therapeutics, Inc.*+ 99,900 8,000 Enzon Pharmaceuticals, Inc.* 109,760 13,000 Genentech, Inc.* 493,870 15,000 Genta, Inc.*+ 112,200 13,000 Genzyme Corp.* 523,640 9,000 Gilead Sciences, Inc.* 415,260 22,500 Human Genome Sciences, Inc.* 263,025 12,000 ICOS Corp.*+ 321,000 12,000 IDEC Pharmaceuticals Corp.* 393,000 12,000 ILEX Oncology, Inc.* 160,680 18,000 Kosan Biosciences, Inc.* 117,720 45,000 Medarex, Inc.* 187,650 15,000 Medicines Co. (The)* 308,250 See notes to financial statements. 8 SHARES ISSUER VALUE Biotechnology (continued) 11,500 MedImmune, Inc.* $405,605 27,500 Millennium Pharmaceuticals, Inc.* 302,500 12,500 Myriad Genetics, Inc.*+ 149,000 9,000 Neurocrine Biosciences, Inc.*+ 407,250 6,000 OSI Pharmaceuticals, Inc.* 126,000 30,000 Protein Design Labs, Inc.* 297,900 23,000 Serona SA, American Depositary Receipt (ADR) (Switzerland) 312,340 16,000 Telik, Inc.*+ 210,400 8,000 Trimeris, Inc.*+ 355,120 15,000 Vertex Pharmaceuticals, Inc. * 181,050 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS 33.28% $3,233,796 - -------------------------------------------------------------------------------- (Cost $3,233,796) Joint Repurchase Agreement 10.95% Investment in a joint repurchase agreement transaction with State Street Bank & Trust Co. - Dated 04-30-03, due 05-01-03 (Secured by U.S. Treasury Inflation Indexed Bond, 3.875% due 04-15-29 and U.S. Treasury Inflation Indexed Notes, 3.000% thru 3.875%, due 01-15-07 thru 07-15-12) 1.28% $1,064 1,064,000 SHARES Cash Equivalents 22.33% AIM Cash Investment Trust** 2,169,796 2,169,796 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS 128.88% $12,524,931 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES, NET (28.88%) ($2,806,439) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL INVESTMENTS 100.00% $9,718,492 - -------------------------------------------------------------------------------- + All or a portion of this security is on loan on April 30, 2003. * Non-income-producing security. ** Represents investment of security lending collateral. Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements. 9 FINANCIAL STATEMENTS ASSETS AND LIABILITIES April 30, 2003 (unaudited) This Statement of Assets and Liabilities is the Fund's balance sheet. It shows the value of what the Fund owns, is due and owes. You'll also find the net asset value and the maximum offering price per share. - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investments at value (cost $12,511,235), including $2,127,251 of securities loaned $12,524,931 Cash 271 Receivable for investments sold 160,067 Receivable for shares sold 1,595 Interest receivable 38 Other assets 60 Total assets 12,686,962 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for investments purchased 756,398 Payable for shares purchased 14,345 Payable for securities on loan 2,169,796 Payable to affiliates 3,501 Other payables and accrued expenses 24,430 Total liabilities 2,968,470 - -------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------- Capital paid-in 17,041,583 Accumulated net realized loss on investments (7,253,074) Net unrealized appreciation of investments 13,696 Accumulated net investment loss (83,713) Net assets $9,718,492 - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - -------------------------------------------------------------------------------- Based on net asset values and shares outstanding Class A ($4,164,745 / 746,609 shares) $5.58 Class B ($4,006,104 / 728,395 shares) $5.50 Class C ($1,547,643 / 281,417 shares) $5.50 - -------------------------------------------------------------------------------- MAXIMUM OFFERING PRICE PER SHARE - -------------------------------------------------------------------------------- Class A 1 ($5.58 / 95%) $5.87 Class C ($5.50 / 99%) $5.56 1 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. 10 FINANCIAL STATEMENTS OPERATIONS For the period ended April 30, 2003 (unaudited)1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in operating the Fund. It also shows net gains (losses) for the period stated. - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- Securities lending $7,489 Interest 3,103 Total investment income 10,592 - -------------------------------------------------------------------------------- EXPENSES - -------------------------------------------------------------------------------- Investment management fee 42,488 Class A distribution and service fee 6,121 Class B distribution and service fee 19,437 Class C distribution and service fee 7,369 Transfer agent fee 36,117 Registration and filing fee 24,966 Auditing fee 9,918 Printing 6,692 Custodian fee 6,534 Accounting and legal services fee 1,261 Miscellaneous 1,018 Advisory board expense 546 Trustees' fee 306 Interest expense 112 Total expenses 162,885 Less expense reductions (68,586) Net expenses 94,299 Net investment loss (83,707) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- Net realized loss on investments (1,081,626) Change in net unrealized appreciation (depreciation) of investments 1,157,315 Net realized and unrealized gain 75,689 Decrease in net assets from operations ($8,018) 1 Semiannual period from 11-1-02 through 4-30-03. See notes to financial statements. 11 FINANCIAL STATEMENTS CHANGES IN NET ASSETS This Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the previous period. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and any increase or decrease in money shareholders invested in the Fund. YEAR PERIOD ENDED ENDED 10-31-02 4-30-03 1 - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS - -------------------------------------------------------------------------------- From operations Net investment loss ($209,026) ($83,707) Net realized loss (5,977,530) (1,081,626) Change in net unrealized appreciation (depreciation) (1,212,776) 1,157,315 Decrease in net assets resulting from operations (7,399,332) (8,018) Distributions to shareholders From net investment income Class A (7,371) - From Fund share transactions 5,858,644 (634,611) - -------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 11,909,180 10,361,121 End of period 2 $10,361,121 $9,718,492 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Includes accumulated net investment loss of $6 and $83,713, respectively. See notes to financial statements. 12 FINANCIAL HIGHLIGHTS CLASS A SHARES The Financial Highlights show how the Fund's net asset value for a share has changed since the end of the previous period.
PERIOD ENDED 10-31-01 1 10-31-02 4-30-03 2 - --------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.00 $9.49 $5.55 Net investment loss 3 (0.07) (0.09) (0.03) Net realized and unrealized gain (loss) on investments (0.44) (3.84) 0.06 Total from investment operations (0.51) (3.93) 0.03 Less distributions From net investment income - (0.01) - Net asset value, end of period $9.49 $5.55 $5.58 Total return 4,5 (%) (5.10) 6 (41.46) 0.54 6 - --------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $6 $4 $4 Ratio of expenses to average net assets (%) 1.60 7 1.60 1.60 7 Ratio of adjusted expenses to average net assets 8 (%) 4.34 7 2.59 3.05 7 Ratio of net investment loss to average net assets (%) (1.15) 7 (1.29) (1.38) 7 Portfolio turnover (%) 63 97 61 See notes to financial statements. 13 FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-01 1 10-31-02 4-30-03 2 - --------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.00 $9.44 $5.49 Net investment loss 3 (0.13) (0.14) (0.05) Net realized and unrealized gain (loss) on investments (0.43) (3.81) 0.06 Total from investment operations (0.56) (3.95) 0.01 Net asset value, end of period $9.44 $5.49 $5.50 Total return 4,5 (%) (5.60) 6 (41.84) 0.18 6 - --------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $4 $4 $4 Ratio of expenses to average net assets (%) 2.30 7 2.30 2.30 7 Ratio of adjusted expenses to average net assets 8 (%) 5.05 7 3.29 3.75 7 Ratio of net investment loss to average net assets (%) (2.01) 7 (1.99) (2.08) 7 Portfolio turnover (%) 63 97 61 See notes to financial statements. 14 FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-01 1 10-31-02 4-30-03 2 - --------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.00 $9.44 $5.49 Net investment loss 3 (0.13) (0.14) (0.05) Net realized and unrealized gain (loss) on investments (0.43) (3.81) 0.06 Total from investment operations (0.56) (3.95) 0.01 Net asset value, end of period $9.44 $5.49 $5.50 Total return 4,5 (%) (5.60) 6 (41.84) 0.18 6 - --------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------- Net assets, end of period (in millions) $2 $2 $2 Ratio of expenses to average net assets (%) 2.30 7 2.30 2.30 7 Ratio of adjusted expenses to average net assets 8 (%) 5.05 7 3.29 3.75 7 Ratio of net investment loss to average net assets (%) (2.07) 7 (1.99) (2.08) 7 Portfolio turnover (%) 63 97 61 1 Class A, Class B and Class C shares began operations on 3-1-01. 2 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 3 Based on the average of the shares outstanding. 4 Assumes dividend reinvestment and does not reflect the effect of sales charges. 5 Total returns would have been lower had certain expenses not been reduced during the periods shown. 6 Not annualized. 7 Annualized. 8 Does not take into consideration expense reductions during the periods shown. See notes to financial statements. 15 NOTES TO STATEMENTS Unaudited NOTE A Accounting policies John Hancock Biotechnology Fund (the "Fund") is a nondiversified series of John Hancock World Fund, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to achieve long-term capital appreciation. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B and Class C shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services, or at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. Investments in AIM Cash Investment Trust are valued at their net asset value each business day. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's 16 custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net assets of the respective classes. Distribution and service fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rate(s) applicable to each class. Expenses The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. Bank borrowings The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into a syndicated line of credit agreement with various banks. This agreement enables the Fund to participate with other funds managed by the Adviser in an unsecured line of credit with banks, which permits borrowings of up to $250 million, collectively. Interest is charged to each fund, based on its borrowing. In addition, a commitment fee is charged to each fund based on the average daily unused portion of the line of credit and is allocated among the participating funds. The Fund had no borrowing activity under the line of credit during the period ended April 30, 2003. Securities lending The Fund may lend securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. As with other extensions of credit, the Fund may bear the risk of delay of the loaned securities in recovery or even loss of rights in the collateral, should the borrower of the securities fail financially. On April 30, 2003, the Fund loaned securities having a market value of $2,127,251 collateralized by cash in the amount of $2,169,796. The cash collateral was invested in a short-term instrument. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $5,313,084 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carryforward expires as follows: October 31, 2009 - $139,642 and October 31, 2010 - $5,173,442. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Fund records distributions to shareholders from 17 net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a monthly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.90% of the first $500,000,000 of the Fund's average daily net asset value, (b) 0.85% of the next $500,000,000 and (c) 0.80% of the Fund's average daily net asset value in excess of $1,000,000,000. The Adviser has agreed to limit the Fund's expenses, excluding the distribution and service fees, to 1.30% of the Funds' average daily net assets, at least until February 28, 2004. Accordingly, the expense reduction amounted to $68,586 for the period ended April 30, 2003. The Adviser reserves the right to terminate this limitation in the future. The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net assets and 1.00% of Class B and Class C average daily net assets. A maximum of 0.25% of such payments may be service fees as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Class A and Class C shares are assessed up-front sales charges. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $6,938 with regard to sales of Class A shares. Of this amount, $1,037 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $4,488 was paid as sales commissions to unrelated broker-dealers and $1,413 was paid as sales commissions to sales personnel of Signator Investors, Inc. ("Signator Investors"), a related broker-dealer. The Adviser's indirect parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect sole shareholder of Signator Investors. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $531 with regard to sales of Class C shares. Of this amount, $422 was paid as sales commissions to unrelated broker-dealers and $109 was paid as sales commissions to sales personnel of Signator Investors. Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser 18 of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used in whole or in part to defray its expenses for providing distribution related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2003, CDSCs received by JH Funds amounted to $8,186 for Class B shares and $119 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.03% of the average net assets of the Fund. The Fund has an independent advisory board composed of scientific and medical experts who provide the investment officers of the Fund with advice and consultation on health-care developments, for which the Fund pays the advisory board a fee. The Adviser and other subsidiaries of JHLICo owned 300,000 shares of beneficial interest of the Fund on April 30, 2003. Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund's deferred compensation liability are recorded on the Fund's books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investments as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund. 19 NOTE C Fund share transactions This listing illustrates the number of Fund shares sold, reinvested and repurchased during the last two periods, along with the corresponding dollar value. The Fund has an unlimited number of shares authorized with no par value. YEAR ENDED 10-31-02 PERIOD ENDED 4-30-03 1 SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------- CLASS A SHARES - ----------------------------------------------------------------------------------------------------- Sold 409,749 $3,245,104 89,517 $480,384 Distributions reinvested 389 3,952 - - Repurchased (209,765) (1,422,329) (156,407) (825,367) Net increase (decrease) 200,373 $1,826,727 (66,890) ($344,983) - ----------------------------------------------------------------------------------------------------- CLASS B SHARES - ----------------------------------------------------------------------------------------------------- Sold 656,696 $5,487,821 69,121 $362,275 Repurchased (275,485) (1,934,504) (124,555) (650,314) Net increase (decrease) 381,211 $3,553,317 (55,434) ($288,039) - ----------------------------------------------------------------------------------------------------- CLASS C SHARES - ----------------------------------------------------------------------------------------------------- Sold 97,638 $826,162 34,855 $183,653 Repurchased (58,498) (347,562) (35,044) (185,242) Net increase (decrease) 39,140 $478,600 (189) ($1,589) - ----------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) 620,724 $5,858,644 (122,513) ($634,611) - -----------------------------------------------------------------------------------------------------
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2003, aggregated $5,682,361 and $6,705,825, respectively. The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $13,000,927. Gross unrealized appreciation and depreciation of investments aggregated $696,461 and $1,172,457, respectively, resulting in net unrealized depreciation of $475,996. The difference between book basis and tax basis net unrealized depreciation of investments is attributable primarily to the tax deferral of losses on wash sales. 20 FOR YOUR INFORMATION TRUSTEES Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove John M. DeCiccio Richard A. Farrell Maureen R. Ford William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt *Members of the Audit Committee OFFICERS Maureen R. Ford Chairman, President and Chief Executive Officer William L. Braman Executive Vice President and Chief Investment Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer Thomas H. Connors Vice President and Compliance Officer INVESTMENT ADVISER John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 PRINCIPAL DISTRIBUTOR John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 CUSTODIAN The Bank of New York One Wall Street New York, New York 10286 TRANSFER AGENT John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 LEGAL COUNSEL Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109-1803 - -------------------------------------------------------------------------------- HOW TO CONTACT US On the Internet www.jhfunds.com By regular mail John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 By express mail John Hancock Signature Services, Inc. Attn: Mutual Fund Image Operations 529 Main Street Charlestown, MA 02129 Customer service representatives 1-800-225-5291 24-hour automated information 1-800-338-8080 TDD line 1-800-554-6713 21 - -------------------------------------------------------------------------------- [LOGO] John Hancock 1-800-225-5291 1-800-554-6713 (TDD) 1-800-338-8080 EASI-Line www.jhfunds.com Now available: electronic delivery www.jhancock.com/funds/edelivery This report is for the information of the shareholders of the John Hancock Biotechnology Fund. 730SA 4/03 6/03 John Hancock Health Sciences Fund SEMI ANNUAL REPORT 4.30.03 Sign up for electronic delivery at www.jhancock.com/funds/edelivery [A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower, center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."] [A photo of Maureen R. Ford, Chairman and Chief Executive Officer, flush left next to first paragraph.] WELCOME Table of contents Your fund at a glance page 1 Manager's report page 2 A look at performance page 6 Growth of $10,000 page 7 Fund's investments page 8 Financial statements page 11 For your information page 25 Dear Fellow Shareholders, After a strong start to 2003, the stock market succumbed to the pressures of a weak economy, rising oil prices, concerns about corporate earnings and uncertainties about the war in Iraq. The tide turned in April, when the war ended and first-quarter corporate earnings came in better than expected. As a result, the major indexes all gained some ground year to date through April 30, 2003, with the Dow Jones Industrial Average returning 2.50%, the Standard & Poor's 500 Index returning 4.82% and the tech-heavy Nasdaq Composite Index up 9.64%. Bonds, which have outperformed stocks for the last three years, continued their upward trend this year, as investors still sought their relative safety. After the jarring stock market losses of the last three years, it's a relief for investors to be reminded that the market is indeed cyclical, and does eventually move up -- not just down. But while the stock market has been clawing its way back, the ride has been extremely volatile. Uncertainty still abounds about the strength of the economy, geopolitical issues, corporate governance problems, rising unemployment and the sustainability of corporate earnings growth. And despite rallies late last year and in April, many investors are still so bruised and skeptical that they have remained on the sidelines. Even though the statistics suggest we might be emerging from this long, difficult bear market, we're not quite ready to call it history. While no one can predict when this bear market cycle will turn, investors can take charge of how they maneuver through such uncertain times. First, take a look at how your portfolio is allocated among stocks, bonds and cash to make sure it's in the proper balance. Work with your investment professional, who knows your long-term goals and can help keep you on the right track, rather than being lured by today's stars, which could wind up tomorrow's laggards. And as always, keep a long-term investment horizon. We believe this offers the best way for you to survive the tough times and reach your investment objectives. Sincerely, /S/ MAUREEN R. FORD Maureen R. Ford, Chairman and Chief Executive Officer This commentary reflects the chairman's views as of April 30, 2003. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term growth of capital by investing primar- ily in stocks of U.S. and foreign health-care companies. Over the last six months * Health-care stocks kept pace with the overall stock market, but subsectors posted mixed results. * The Fund benefited from its biotech and health-equipment company holdings. * Health-care facility companies, including hospital systems, were the biggest disappointments. [Bar chart with heading "John Hancock Health Sciences Fund." Under the heading is a note that reads "Fund performance for the six months ended April 30, 2003." The chart is scaled in increments of 1% with 0% at the bottom and 2% at the top. The first bar represents the 1.70% total return for Class A. The second bar represents the 1.33% total return for Class B. The third bar represents the 1.33% total return for Class C. A note below the chart reads "Total returns for the Fund are at net asset value with all distributions reinvested."] Top 10 holdings 6.4% Pfizer, Inc. 6.2% Amgen, Inc. 5.9% Medtronic, Inc. 5.4% Johnson & Johnson 3.5% UnitedHealth Group, Inc. 3.3% Merck & Co., Inc. 3.2% Forest Laboratories, Inc. 3.1% Lilly (Eli) & Co. 3.0% Stryker Corp. 2.6% Varian Medical Systems, Inc. As a percentage of net assets on April 30, 2003. MANAGER'S REPORT BY LINDA I. MILLER, CFA, PORTFOLIO MANAGER John Hancock Health Sciences Fund As a group, health-care stocks generally performed in line with the overall stock market over the last six months, enjoying a bit of a rebound. Part of health care's strength stemmed from investors' concerns about the strength of an economic recovery. Health-care companies generally aren't dependent on an upturn in the economy to do well. That said, the various industry groups that comprise the health-care sector posted mixed results. Makers of high-technology medical equipment -- such as those offering orthopedic implants, cardiovascular devices, diagnostic and oncology treatment systems and others -- benefited from a robust new-product cycle, industry consolidation, the relatively strong financial position of their customers (primarily hospitals) and increasing demand from the aging U.S. and European populations. In addition, these companies generally were helped by favorable currency trends. As the U.S. dollar declined in value relative to the euro, many of these companies -- whose products became cheaper in euro terms and thus more competitive -- enjoyed significant increases in European sales. Managed care companies such as HMOs benefited from better financial results based on some moderation in medical cost increases, rising premiums for health insurance products and seasonal factors. Drug stocks continued to face the challenges of patent expirations, regulatory scrutiny of manufacturing procedures, inventory management and the lack of new-product approvals. Biotech stock returns, generally the most volatile in this group, varied from relatively strong gains for the more visible, established companies and those who enjoyed positive new-product or reimbursement developments, to weaker results for companies with negative clinical developments or disappointing revenue and earnings performance. "...health-care stocks generally performed in line with the overall stock market..." PERFORMANCE AND STRATEGY REVIEW For the six months ended April 30, 2003, John Hancock Health Sciences Fund's Class A, Class B and Class C shares posted total returns of 1.70%, 1.33% and 1.33%, respectively, at net asset value. The Fund's returns lagged the 4.99% return of the average health-care/biotechnology fund, according to Lipper, Inc.1 In this period, the broad Standard & Poor's 500 Index returned 4.47%. Keep in mind that your net asset value return will be different from the Fund's performance if you were not invested in the Fund for the entire period and did not reinvest all distributions. Please see pages six and seven for longer-term performance information. [A photo of Linda Miller flush right next to first paragraph.] We believe a key reason for the Fund's lag was our overweighting -- relative to the overall health sector -- in companies that distribute drugs. It stands to reason that if drug companies sell more drugs, which they did during the period, then companies that distribute those drugs would prosper. Unfortunately, many drug distributors came under pressure because the drug companies streamlined operations, cutting into the margins of the companies that service them. Against that backdrop, Cardinal Health was one of our biggest disappointments during the period. "We also enjoyed good returns from our holdings in health-care equipment companies..." BIOTECH, EQUIPMENT STOCKS BOOST RETURNS One of the biggest positive contributors to the Fund's performance during the period was Amgen, the world's largest biotechnology company. Amgen enjoyed significantly higher sales, benefiting from its 2002 acquisition of Immunex, which gave it the arthritis drug Enbrel. Higher sales of anemia treatments Epogen and Aranesp and drugs for boosting the immune systems of chemotherapy patients also helped. According to the company, another factor working in its favor was its ability to fill prescriptions for thousands of patients on a waiting list, thanks to increased manufacturing capacity. Another biotech company that helped performance was Genzyme, profiting from the expected FDA approval of two new drugs, as well as its ability to correct problems with supplies of existing drugs. [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Medical devices & products 22%, the second is Drugs-biotechnology 21%, the third Drugs-major 15%, the fourth Drugs-specialty & generic 11% and the fifth Drugs-diversified 8 %.] We also enjoyed good returns from our holdings in health-care equipment companies -- the manufacturers of heart devices, artificial knees, hips and shoulders and other medical products -- including Medtronic, St. Jude Medical, Integra LifeSciences and Stryker. While the weak economy, war with Iraq and bad weather curtailed demand for nonessential medical procedures, the demand for life-saving and essential medical procedures continued to expand. Many of these companies also were helped by new products and improving reimbursement trends. Thoratech, for example, was boosted by Medicare's decision to pay for an artificial pump to keep the blood flowing in heart-failure patients too sick for a heart transplant. [Pie chart at middle of page with heading "Portfolio diversification As a percentage of net assets on 4-30-03." The chart is divided into two sections (from top to left): Common stocks 94% and Short-term investments & other 6%.] War, weather and the economy, however, did hold back some of our health-care facilities companies, which saw a decline in patient traffic. HCA, a leading hospital company, posted lower-than-expected earnings due to those factors and others, including intensifying pressure from managed care companies and heightened competition in some markets. [Table at top of page entitled "SCORECARD." The header for the left column is "INVESTMENT" and the header for the right column is "PERIOD'S PERFORMANCE...AND WHAT'S BEHIND THE NUMBERS." The first listing is Amgen followed by an up arrow with the phrase "Strong demand for company's products." The second listing is Thoratech followed by an up arrow with the phrase "Medicare agrees to pay for heart pump." The third listing is Cardinal Health followed by a down arrow with the phrase "Revenues squeezed by drug makers."] Large pharmaceutical company returns were inconsistent. Merck and Eli Lilly turned in positive results, while Pfizer -- plagued by investors' concerns over its mega-acquisition of Pharmacia -- lagged during the period. OUTLOOK In our opinion, it's quite likely that the health-care group will continue to face some challenges in 2003, which may mean that the group experiences ongoing volatility. A rebound in economic growth, for example, may prompt investors to move away from this sector into faster-growing industry groups. And there are always ongoing hurdles for the group, such as the risks involved in new-product development; the rising costs of research, development, manufacturing and sales; and the weaker financial condition of payers for health care around the world. That said, we believe that there are also a number of positives working in the group's longer-term favor including an aging world population, continued innovation and discovery in the field of medical sciences and reduced near-term political risk. "...we believe that there are also a number of positives working in the group's longer-term favor..." This commentary reflects the views of the portfolio manager through the end of the Fund's period discussed in this report. The manager's statements reflect her own opinions. As such, they are in no way guarantees of future events, and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant. Sector investing is subject to greater risks than the market as a whole. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. A LOOK AT PERFORMANCE For the period ended April 30, 2003 The index used for comparison is the Standard & Poor's 500 Index, Index 1, an unmanaged index that includes 500 widely traded common stocks. Also shown on page 7 is the Russell 3000 Healthcare Index, Index 2, a capitaliza- tion-weighted index composed of compa- nies involved in medical services or health care. It is not possible to invest in an index. Class A Class B Class C Index 1 Inception date 10-1-91 3-7-94 3-1-99 -- Average annual returns with maximum sales charge (POP) One year -15.57% -16.16% -13.52% -13.30% Five years 0.75% 0.70% -- -2.42% Ten years 11.70% -- -- 9.66% Since inception -- 9.08% 0.87% -- Cumulative total returns with maximum sales charge (POP) Six months -3.37% -3.67% -0.68% 4.47% One year -15.57% -16.16% -13.52% -13.30% Five years 3.80% 3.56% -- -11.54% Ten years 202.24% -- -- 151.49% Since inception -- 121.42% 3.69% -- Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5% and Class C shares of 1%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. The return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than the original cost. Index figures do not reflect sales charges and would be lower if they did. The returns reflect past results and should not be considered indicative of future performance. The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in the two indexes described on page 6. Line chart with the heading "GROWTH OF $10,000." Within the chart are four lines. The first line represents Index 2 and is equal to $37,979 as of April 30, 2003. The second line represents the value of the hypothetical $10,000 investment made in the John Hancock Health Sciences Fund, before sales charge, and is equal to $31,823 as of April 30, 2003. The third line represents the value of the same hypothetical investment made in the John Hancock Health Sciences Fund, after sales charge, and is equal to $30,224 as of April 30, 2003. The fourth line represents Index 1 and is equal to $25,149 as of April 30, 2003. Class B 1 Class C 1 Period beginning 3-7-94 3-1-99 Without sales charge $22,142 $10,473 With maximum sales charge -- $10,368 Index 1 $23,124 $7,844 Index 2 $35,652 $9,279 Assuming all distributions were reinvested for the period indicated, the table above shows the value of a $10,000 investment in the Fund's Class B and Class C shares, respectively, as of April 30, 2003. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes. 1 No contingent deferred sales charge applicable. FINANCIAL STATEMENTS FUND'S INVESTMENTS Securities owned by the Fund on April 30, 2003 (unaudited) This schedule is divided into two main categories: common stocks and short-term investments. Stocks are further broken down by industry group. Short-term investments, which represent the Fund's cash position, are listed last.
SHARES ISSUER VALUE COMMON STOCKS 94.44% $250,336,439 (Cost $190,591,160) Drugs -- Biotechnology 20.55% 54,464,989 65,000 Adolor Corp.* + 909,350 270,000 Amgen, Inc.* + 16,553,700 100,000 Amylin Pharmaceuticals, Inc.* + 1,915,000 35,000 Biogen, Inc.* + 1,329,650 90,000 BioMarin Pharmaceutical, Inc.* 988,200 70,000 Celgene Corp.* + 1,862,700 75,000 Cephalon, Inc. + 3,063,000 30,000 Chiron Corp. * + 1,224,900 55,000 CV Therapeutics, Inc.* + 1,098,900 110,000 Genentech, Inc.* + 4,178,900 65,000 Genzyme Corp.* 2,618,200 31,946 Gilead Sciences, Inc.* 1,473,989 120,000 Human Genome Sciences, Inc.* 1,402,800 55,000 ICOS Corp.* + 1,471,250 90,000 IDEC Pharmaceuticals Corp.* + 2,947,500 105,000 Kosan Biosciences, Inc. * 686,700 70,000 Medicines Co. (The)* + 1,438,500 55,000 MedImmune, Inc.* 1,939,850 185,000 Millennium Pharmaceuticals, Inc.* + 2,035,000 50,000 Neurocrine Biosciences, Inc.* + 2,262,500 50,000 Trimeris, Inc.* + 2,219,500 70,000 Vertex Pharmaceuticals, Inc. * 844,900 Drugs -- Diversified 7.80% 20,669,450 155,000 Abbott Laboratories 6,297,650 255,000 Johnson & Johnson 14,371,800 Drugs -- Major 15.42% 40,876,300 80,000 AstraZeneca Plc American Depositary Receipts (ADR) (United Kingdom) 3,189,600 130,000 Lilly (Eli) & Co. 8,296,600 150,000 Merck & Co., Inc. 8,727,000 95,000 Novartis AG (ADR) (Switzerland) + 3,750,600 550,000 Pfizer, Inc. 16,912,500 Drugs -- Specialty and Generic 10.90% 28,883,850 100,000 aaiPharma, Inc.*+ 1,130,000 70,000 Alcon, Inc.* (Switzerland) 3,083,500 40,000 Allergan, Inc. 2,810,000 41,000 Barr Laboratories, Inc.* 2,279,600 80,000 Biovail Corp.* (Canada) 2,892,000 165,000 Forest Laboratories, Inc.* + 8,533,800 50,000 Medicis Pharmaceutical Corp. (Class A)* + 2,882,000 60,000 Teva Pharmaceutical Industries Ltd. (ADR) (Israel) 2,802,000 85,000 Watson Pharmaceutical, Inc.* 2,470,950 Drugs & Sundries -- Wholesale 2.99% 7,931,950 75,000 AmerisourceBergen Corp. + 4,338,750 65,000 Cardinal Health, Inc. 3,593,200 Health Care -- Hospitals 1.51% 4,012,500 125,000 HCA, Inc. 4,012,500 Health Care -- Services 5.71% 15,139,600 70,000 Advisory Board Co. (The)* + 2,563,400 110,000 Caremark Rx, Inc.* 2,190,100 75,000 Charles River Laboratories International, Inc.* 2,036,250 135,000 Covance, Inc.* 2,393,550 115,000 DaVita, Inc.* + 2,371,300 60,000 Quest Diagnostics, Inc.* + 3,585,000 Instruments -- Scientific 0.60% 1,580,400 60,000 Affymetrix, Inc.* + 1,113,000 60,000 Bruker AXS, Inc.* 123,600 20,000 Robbins & Myers, Inc. 343,800 Insurance 7.28% 19,305,900 60,000 Anthem, Inc.* + 4,118,400 50,000 Mid Atlantic Medical Services, Inc.* 2,177,500 100,000 UnitedHealth Group, Inc. 9,213,000 50,000 Wellpoint Health Networks, Inc.* + 3,797,000 Medical Devices and Products 21.68% 57,471,500 60,000 Biomet, Inc. 1,827,600 65,000 Boston Scientific Corp.* + 2,798,250 50,000 CTI Molecular Imaging, Inc.* + 918,000 80,000 DENTSPLY International, Inc. 2,996,000 85,000 Diagnostic Products Corp. 3,357,500 70,000 Edwards Lifesciences Corp.* + 2,020,900 45,000 ICU Medical, Inc.* + 1,430,100 85,000 Integra LifeSciences Holdings* + 2,268,650 325,000 Medtronic, Inc. 15,515,500 75,000 St. Jude Medical, Inc.* 3,934,500 120,000 Stryker Corp. + 8,041,200 100,000 Thoratec Corp.* + 1,375,000 130,000 Varian Medical Systems, Inc.* 7,001,800 85,000 Zimmer Holdings, Inc.* + 3,986,500 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 34.48% $91,380,699 (Cost $91,380,699) Joint Repurchase Agreement 6.40% Investment in a joint repurchase agreement transaction with State Street Bank & Trust Co. -- Date 04-30-03, due 05-01-03 (Secured by U.S. Treasury Inflation Indexed Bond 3.875% due 04-15-29, U.S. Treasury Inflation Indexed Notes 3.875% due 01-15-07 and 3.000% due 07-15-12) 1.280% $16,967 16,967,000 SHARES Cash Equivalents 28.08% AIM Cash Investment Trust ** 74,413,699 74,413,699 TOTAL INVESTMENTS 128.92% $341,717,138 OTHER ASSETS AND LIABILITIES, NET (28.92%) ($76,653,337) TOTAL NET ASSETS 100.00% $265,063,801
+ All or a portion of this security is on loan on April 30, 2003. * Non-income-producing security. ** Represents investment of security lending collateral. Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements. ASSETS AND LIABILITIES April 30, 2003 (unaudited) 1 This Statement of Assets and Liabilities is the Fund's balance sheet. It shows the value of what the Fund owns, is due and owes. You'll also find the net asset value and the maximum offering price per share. ASSETS Investments at value (cost $281,971,859) including $72,954,607 of securities loaned $341,717,138 Receivable for investments sold 2,845,781 Receivable for shares sold 29,756 Dividends and interest receivable 45,048 Other assets 10,837 Total assets 344,648,560 LIABILITIES Due to custodian 118,147 Payable for investments purchased 4,208,978 Payable for shares repurchased 80,752 Payable for securities on loan 74,413,699 Payable to affiliates 683,038 Other payables and accrued expenses 80,145 Total liabilities 79,584,759 NET ASSETS Capital paid-in 245,748,521 Accumulated net realized loss on investments (38,390,243) Net unrealized appreciation of investments and translation of assets and liabilities in foreign currencies 59,745,363 Accumulated net investment loss (2,039,840) Net assets $265,063,801 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($105,212,955 [DIV] 2,983,818 shares) $35.26 Class B ($148,450,234 [DIV] 4,522,534 shares) $32.82 Class C ($11,400,612 [DIV] 347,331 shares) $32.82 MAXIMUM OFFERING PRICE PER SHARE Class A1 ($35.26 [DIV] 95%) $37.12 Class C ($32.82 [DIV] 99%) $33.15 1 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. OPERATIONS For the period ended April 30, 2003 (unaudited) 1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in operat- ing the Fund. It also shows net gains (losses) for the period stated. INVESTMENT INCOME Dividends (net of foreign withholding taxes of $11,587) $698,838 Securities lending 98,708 Interest 75,741 Total investment income 873,287 EXPENSES Investment management fee 1,025,814 Class A distribution and service fee 155,140 Class B distribution and service fee 749,957 Class C distribution and service fee 56,676 Transfer agent fee 736,609 Accounting and legal services fee 55,471 Custodian fee 30,027 Registration and filing fee 28,094 Printing 17,436 Auditing fee 16,829 Advisory board expense 15,594 Trustees' fee 9,117 Miscellaneous 8,829 Legal fee 1,708 Interest expense 344 Total expenses 2,907,645 Net investment loss (2,034,358) REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on investments (2,781,597) Change in net unrealized appreciation (depreciation) of Investments 8,062,804 Translation of assets and liabilities in foreign currencies 24 Net realized and unrealized gain 5,281,231 Increase in net assets from operations $3,246,873 1 Semiannual period from 11-1-02 through 4-30-03. See notes to financial statements. CHANGES IN NET ASSETS This Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the previous period. The dif- ference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and any increase or decrease in money share- holders invested in the Fund. YEAR PERIOD ENDED ENDED 10-31-02 4-30-03 1 INCREASE (DECREASE) IN NET ASSETS From operations Net investment loss ($5,230,634) ($2,034,358) Net realized loss (15,488,263) (2,781,597) Change in net unrealized appreciation (depreciation) (31,410,259) 8,062,828 Increase (decrease) in net assets resulting from operations (52,129,156) 3,246,873 From Fund share transactions (54,454,608) (21,973,281) NET ASSETS Beginning of period 390,373,973 283,790,209 End of period 2 $283,790,209 $265,063,801 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Includes accumulated net investment loss of $5,482 and $2,039,840, respectively. See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS A SHARES The Financial Highlights show how the Fund's net asset value for a share has changed since the end of the previous period. PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $30.25 $33.89 $34.28 $49.99 $40.06 $34.67 Net investment loss 2 (0.23) (0.18) (0.33) (0.37) (0.41) (0.19) Net realized and unrealized gain (loss) on investments 4.38 0.57 16.04 (5.99) (4.98) 0.78 Total from investment operations 4.15 0.39 15.71 (6.36) (5.39) 0.59 Less distributions From net realized gain (0.51) -- -- (3.57) -- -- Net asset value, end of period $33.89 $34.28 $49.99 $40.06 $34.67 $35.26 Total return 3 (%) 13.91 1.15 45.83 (13.56) (13.45) 1.70 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $84 $93 $178 $145 $110 $105 Ratio of expenses to average net assets (%) 1.61 1.60 1.50 1.50 1.59 1.77 5 Ratio of net investment loss to average net assets (%) (0.71) (0.52) (0.75) (0.87) (1.06) (1.11) 5 Portfolio turnover (%) 39 61 147 91 85 38
See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $29.40 $32.69 $32.83 $47.55 $37.68 $32.39 Net investment loss 2 (0.45) (0.41) (0.60) (0.63) (0.63) (0.29) Net realized and unrealized gain (loss) on investments 4.25 0.55 15.32 (5.67) (4.66) 0.72 Total from investment operations 3.80 0.14 14.72 (6.30) (5.29) 0.43 Less distributions From net realized gain (0.51) -- -- (3.57) -- -- Net asset value, end of period $32.69 $32.83 $47.55 $37.68 $32.39 $32.82 Total return 3 (%) 13.11 0.43 44.84 (14.18) (14.04) 1.33 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $124 $152 $294 $231 $162 $148 Ratio of expenses to average net assets (%) 2.31 2.30 2.20 2.20 2.29 2.47 5 Ratio of net investment loss to average net assets (%) (1.41) (1.22) (1.46) (1.57) (1.76) (1.81) 5 Portfolio turnover (%) 39 61 147 91 85 38
See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-99 6 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $33.94 $32.83 $47.55 $37.68 $32.39 Net investment loss 2 (0.28) (0.64) (0.63) (0.63) (0.29) Net realized and unrealized gain (loss) on investments (0.83) 15.36 (5.67) (4.66) 0.72 Total from investment operations (1.11) 14.72 (6.30) (5.29) 0.43 Less distributions From net realized gain -- -- (3.57) -- -- Net asset value, end of period $32.83 $47.55 $37.68 $32.39 $32.82 Total return 3 (%) (3.27) 4 44.84 (14.18) (14.04) 1.33 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $2 $14 $15 $12 $11 Ratio of expenses to average net assets (%) 2.40 5 2.20 2.20 2.29 2.47 5 Ratio of net investment loss to average net assets (%) (1.30) 5 (1.50) (1.58) (1.76) (1.81) 5 Portfolio turnover (%) 61 147 91 85 38 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Based on the average of the shares outstanding. 3 Assumes dividend reinvestment and does not reflect the effect of sales charges. 4 Not annualized. 5 Annualized. 6 Class C shares began operations on 3-1-99.
See notes to financial statements. NOTES TO STATEMENTS Unaudited NOTE A Accounting policies John Hancock Health Sciences Fund (the "Fund") is a non-diversified series of John Hancock World Fund, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to achieve long-term growth of capital. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B and Class C shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or, if quotations are not readily available, or the value has been materially affected by events occurring after the closing of a foreign market, at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. Investments in AIM Cash Investment Trust are valued at their net asset value each business day. All portfolio transactions initially expressed in terms of foreign currencies have been translated into U.S. dollars as described in "Foreign currency translation" below. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times. Foreign currency translation All assets or liabilities initially expressed in terms of foreign currencies are translated into U.S. dollars based on London currency exchange quotations as of 5:00 P.M., London time, on the date of any determination of the net asset value of the Fund. Transactions affecting statement of operations accounts and net realized gain (loss) on investments are translated at the rates prevailing at the dates of the transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, other than invest -ments in securities, resulting from changes in the exchange rates. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Capital gains realized on some foreign securities are subject to foreign taxes, which are accrued as applicable. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net assets of the respective classes. Distri bution and service fees, ifany, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rate(s) applicable to each class. Expenses The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. Bank borrowings The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into a syndicated line of credit agreement with various banks. This agreement enables the Fund to participate with other funds managed by the Adviser in an unsecured line of credit with banks, which permits borrowings of up to $250 million, collectively. Interest is charged to each fund, based on its borrowing. In addition, a commit -ment fee is charged to each fund based on the average daily unused portion of the line of credit and is allocated among the participating funds. The Fund had no borrowing activity under the line of credit during the period ended April 30, 2003. Securities lending The Fund may lend securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. As with other extensions of credit, the Fund may bear the risk of delay of the loaned securities in recovery or even loss of rights in the collateral, should the borrower of the securities fail financially. On April 30, 2003, the Fund loaned securities having a market value of $72,954,607 collateralized by cash in the amount of $74,413,699. The cash collateral was invested in a short-term instrument. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $29,055,115 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carryforward expires as follows: October 31, 2009 -- $16,212,040 and October 31, 2010 -- $12,843,075. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a quarterly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.80% of the first $200,000,000 of the Fund's average daily net asset value and (b) 0.70% of the Fund's daily average net asset value in excess of $200,000,000. The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net assets and 1.00% of Class B and Class C average daily net assets. A maximum of 0.25% of such payments may be service fees as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Class A and Class C shares are assessed up-front sales charges. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $92,746 with regard to sales of Class A shares. Of this amount, $11,688 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $64,852 was paid as sales commissions to unrelated broker-dealers and $16,206 was paid as sales commissions to sales personnel of Signator Investors, Inc. ("Signator Investors"), a related broker-dealer. The Adviser's indirect parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect sole shareholder of Signator Investors. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $9,183 with regard to sales of Class C shares. Of this amount, $8,905 was paid as sales commissions to unrelated broker-dealers and $278 was paid as sales commissions to sales personnel of Signator Investors. Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used in whole or in part to defray its expenses for providing distribution-related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2003, CDSCs received by JH Funds amounted to $182,298 for Class B shares and $903 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a monthly transfer agent fee at an annual rate of 0.05%, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.04% of the average net assets of the Fund. The Fund has an independent advisory board composed of scientific and medical experts who provide the investment officers of the Fund with advice and consultation on health-care developments, for which the Fund pays the advisory board a fee. Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund's deferred compensation liability are recorded on the Fund's books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investments as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund. NOTE C Fund share transactions This listing illustrates the number of Fund shares sold and repurchased during the last two periods, along with the corresponding dollar value. The Fund has an unlimited number of shares authorized with no par value.
YEAR ENDED 10-31-02 PERIOD ENDED 4-30-03 1 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 811,501 $30,907,585 310,941 $10,634,697 Repurchased (1,238,558) (46,192,043) (510,577) (17,343,705) Net decrease (427,057) ($15,284,458) (199,636) ($6,709,008) CLASS B SHARES Sold 629,775 $23,090,576 163,982 $5,231,833 Repurchased (1,767,118) (61,384,888) (630,193) (19,937,758) Net decrease (1,137,343) ($38,294,312) (466,211) ($14,705,925) CLASS C SHARES Sold 97,382 $3,575,235 34,505 $1,103,239 Repurchased (128,009) (4,451,073) (52,616) (1,661,587) Net decrease (30,627) ($875,838) (18,111) ($558,348) NET DECREASE (1,595,027) ($54,454,608) (683,958) ($21,973,281)
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2003, aggregated $97,931,460 and $133,045,745, respectively. The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $285,767,749. Gross unrealized appreciation and depreciation of investments aggregated $60,621,022 and $4,671,633, respectively, resulting in net unrealized appreciation of $55,949,389. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on wash sales. 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Please read the prospectus carefully before investing or sending money. ELECTRONIC DELIVERY Now available from John Hancock Funds Instead of receiving annual and semiannual reports and prospectuses through the U.S. mail, we'll notify you by e-mail when these documents are available for online viewing. How does electronic delivery benefit you? * No more waiting for the mail to arrive; you'll receive an e-mail notification as soon as the document is ready for online viewing. * Reduces the amount of paper mail you receive from John Hancock Funds. * Reduces costs associated with printing and mailing. Sign up for electronic delivery today at www.jhancock.com/funds/edelivery OUR WEB SITE A wealth of information-- www.jhfunds.com View the latest information for your account. - ------------------------------------------------ Transfer money from one account to another. - ------------------------------------------------ Get current quotes for major market indexes. - ------------------------------------------------ Use our online calculators to help you with your financial goals. - ------------------------------------------------ Get up-to-date commentary from John Hancock Funds investment experts. - ------------------------------------------------ Access forms, applications and tax information. - ------------------------------------------------ FOR YOUR INFORMATION TRUSTEES Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove John M. DeCiccio Richard A. Farrell Maureen R. Ford William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt *Members of the Audit Committee OFFICERS Maureen R. Ford Chairman, President and Chief Executive Officer William L. Braman Executive Vice President and Chief Investment Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer Thomas H. Connors Vice President and Compliance Officer INVESTMENT ADVISER John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 PRINCIPAL DISTRIBUTOR John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 CUSTODIAN The Bank of New York One Wall Street New York, New York 10286 TRANSFER AGENT John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 LEGAL COUNSEL Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109-1803 HOW TO CONTACT US On the Internet www.jhfunds.com By regular mail John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 By express mail John Hancock Signature Services, Inc. Attn: Mutual Fund Image Operations 529 Main Street Charlestown, MA 02129 Customer service representatives 1-800-225-5291 24-hour automated information 1-800-338-8080 TDD line 1-800-554-6713 [A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner. A tag line below reads "JOHN HANCOCK FUNDS."] 1-800-225-5291 1-800-554-6713 (TDD) 1-800-338-8080 EASI-Line www.jhfunds.com Now available: electronic delivery www.jhancock.com/funds/edelivery This report is for the information of the shareholders of the John Hancock Health Sciences Fund. 280SA 4/03 6/03 John Hancock Pacific Basin Equities Fund SEMI ANNUAL REPORT 4.30.03 Sign up for electronic delivery at www.jhancock.com/funds/edelivery [A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower, center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."] [A photo of Maureen R. Ford, Chairman and Chief Executive Officer, flush left next to first paragraph.] WELCOME Table of contents Your fund at a glance page 1 Managers' report page 2 A look at performance page 6 Growth of $10,000 page 7 Fund's investments page 8 Financial statements page 13 For your information page 25 Dear Fellow Shareholders, After a strong start to 2003, the stock market succumbed to the pressures of a weak economy, rising oil prices, concerns about corporate earnings and uncertainties about the war in Iraq. The tide turned in April, when the war ended and first-quarter corporate earnings came in better than expected. As a result, the major indexes all gained some ground year to date through April 30, 2003, with the Dow Jones Industrial Average returning 2.50%, the Standard & Poor's 500 Index returning 4.82% and the tech-heavy Nasdaq Composite Index up 9.64%. Bonds, which have outperformed stocks for the last three years, continued their upward trend this year, as investors still sought their relative safety. After the jarring stock market losses of the last three years, it's a relief for investors to be reminded that the market is indeed cyclical, and does eventually move up -- not just down. But while the stock market has been clawing its way back, the ride has been extremely volatile. Uncertainty still abounds about the strength of the economy, geopolitical issues, corporate governance problems, rising unemployment and the sustainability of corporate earnings growth. And despite rallies late last year and in April, many investors are still so bruised and skeptical that they have remained on the sidelines. Even though the statistics suggest we might be emerging from this long, difficult bear market, we're not quite ready to call it history. While no one can predict when this bear market cycle will turn, investors can take charge of how they maneuver through such uncertain times. First, take a look at how your portfolio is allocated among stocks, bonds and cash to make sure it's in the proper balance. Work with your investment professional, who knows your long-term goals and can help keep you on the right track, rather than being lured by today's stars, which could wind up tomorrow's laggards. And as always, keep a long-term investment horizon. We believe this offers the best way for you to survive the tough times and reach your investment objectives. Sincerely, /S/ MAUREEN R. FORD Maureen R. Ford, Chairman and Chief Executive Officer This commentary reflects the chairman's views as of April 30, 2003. They are subject to change at any time. YOUR FUND AT A GLANCE The Fund seeks long-term growth of capital by investing primarily in stocks of companies located in the Pacific Basin. Over the last six months * The buildup to the U.S.-led war against Iraq created uncertainty and unsettled the international stock markets. * Global economic growth remained sluggish. * Growth stocks appeared to be coming back into favor. [Bar chart with heading "John Hancock Pacific Basin Equities Fund." Under the heading is a note that reads "Fund performance for the six months ended April 30, 2003." The chart is scaled in increments of 7% with -14% at the bottom and 0% at the top. The first bar represents the - -11.81% total return for Class A. The second bar represents the -12.16% total return for Class B. The third bar represents the -12.16% total return for Class C. A note below the chart reads "Total returns for the Fund are at net asset value with all distributions reinvested."] Top 10 holdings 3.4% Samsung Electronics Co., Ltd. 3.3% Toyota Motor Corp. 3.1% BYD Co., Ltd. 2.5% Hyundai Department Store Co., Ltd. 2.5% Hoya Corp. 2.5% Shinsegae Co., Ltd. 2.4% Shinhan Financial Group Co., Ltd. 2.3% Taiwan Semiconductor Manufacturing Co. Ltd. 2.3% Ssangyong Motor Co. 2.3% Chartered Semiconductor Manufacturing Ltd. As a percentage of net assets on April 30, 2003. BY SHU NUNG LEE, CFA, FOR THE NICHOLAS-APPLEGATE CAPITAL MANAGEMENT PORTFOLIO MANAGEMENT TEAM John Hancock Pacific Basin Equities Fund MANAGERS' REPORT The international stock markets endured yet another challenging period during the six months ended April 30, 2003. Sluggish economic growth worldwide, the specter of war in Iraq and deteriorating conditions in the German and Japanese financial systems dampened investor sentiment. Amid such uncertainty, Pacific Rim equities lost ground in the period, with the representative MSCI All Country Pacific Free Index returning - -4.98%. In early October, shortly before the period began, international equities, which became sharply oversold in the third quarter, rallied as many beaten-down stocks rebounded. Late in 2002, international stocks retreated somewhat as concerns arose that per-share earnings estimates remained high. "Amid such uncertainty, Pacific Rim equities lost ground in the period..." The new year opened with investors holding high hopes, but declines in each month of the first quarter dashed those hopes, as a combination of war worries and weak economic data spurred a sell-off in stocks. In developed markets, European equities outperformed Japanese equities, in part due to a somewhat stronger euro and slightly weaker yen. Asian performance was hurt most by negative returns in Korea, India and China. In April, the international stock markets staged a strong rally as the situation in Iraq appeared to be nearing resolution, energy prices moderated and earnings -- although still weak -- came in slightly better than anticipated. However, Pacific Rim equities advanced significantly less than their counterparts in the United States and Europe. FUND PERFORMANCE EXPLAINED For the six months ended April 30, 2003, John Hancock Pacific Basin Equities Fund's Class A, Class B and Class C shares posted total returns of -11.81%, -12.16% and -12.16%, respectively, at net asset value. During the same period, the average Pacific region fund returned - -6.57%, according to Lipper, Inc.,1 while the benchmark MSCI All Country Pacific Free Index fell 4.98%. Keep in mind that your net asset value return will be different from the Fund's performance if you were not invested in the Fund for the entire period and did not reinvest all distributions. See pages six and seven for historical performance information. The Fund's underperformance relative to its peers and benchmark was largely the result of disappointing stock selection in the producers/manufacturing, financial services and consumer services sectors. In particular, holdings in Japanese financial firms negatively influenced both absolute and relative returns, as did investments in leisure/gaming companies and electronic instruments manufacturers. By country, Japanese and Australian stocks hurt the portfolio despite underweight positions in both nations. "...stock selection and over weight exposure to the consumer nondurables sector...proved to be the lone bright spot..." On the positive side, stock selection and overweight exposure to the consumer nondurables sector, while down slightly in absolute terms, proved to be the lone bright spot for the portfolio. Industry holdings that supported performance included agriculture, telephone companies and advertising firms. By country, our overweight positions in Indonesia, whose stock market rose 37%, and stock selection in Thailand and the Philippines proved positive. Top-performing holdings during the reporting period included Philippine Long Distance Telephone Co., the leading supplier of domestic and international telecommunications services in the Philippines, and Thai Union Frozen Products, which specializes in frozen packaged seafood products. Philippine Long Distance benefited from continuing stronger-than-expected results at its Smart subsidiary, the removal of provisions for its Piltel subsidiary, and lower compensation expenses as it continues to substantially reduce headcount. Thai Union gained on strong sales growth of its tuna products, particularly in the European Union and the Middle East. The company is the only supplier of tuna products to the U.S. military, so it also advanced on the prospect of increased war-related spending. Decliners included numerous Japanese companies, such as Nomura Securities, Mitsubishi Tokyo, Sony and Hitachi. [Table at top left-hand side of page entitled "Top five industry groups." The first listing is Electronics 25%, the second is Automobiles/trucks 9%, the third Retail 6%, the fourth Finance 5%, and the fifth Leisure 4%.] FUND MOVES During the period, based on our assessment of individual stocks' appreciation potential, we shifted assets out of Japan and Australia in favor of opportunities in South Korea and China. We believe easing of tensions with North Korea should help the South Korean stock market regain its footing. Meanwhile, China -- despite the impact of Severe Acute Respiratory Syndrome, or SARS -- continues to experience strong export growth. [Bar chart at middle of page with heading "Top Countries As a percentage of net assets on 4-30-03." The chart is divided into five sections: Japan 37%, South Korea 17%, Taiwan 8%, Hong Kong 6% and Singapore 6%. ] OUTLOOK On a macro level, geopolitical concerns are currently driving the equity markets. Fundamentals remain weak, especially in Germany, France and Japan. Capital equipment spending is beginning to stabilize, which bodes well for future growth, and inflation remains tame. Although U.S. companies generally have been meeting or beating earnings expectations, international companies are not yet doing so. Positive developments include a stability pact in the European Union that allows higher budget deficits and government spending during exceptional periods, as well as a reform package in Germany tightening unemployment and insurance benefits. Japan was under selling pressure because its fiscal year ended March 31, but we believe this pressure should be abating now that its new fiscal year has begun. [Table at top of page entitled "SCORECARD." The header for the left column is "INVESTMENT" and the header for the right column is "PERIOD'S PERFORMANCE...AND WHAT'S BEHIND THE NUMBERS." The first listing is Philippine Long Distance Telephone followed by an up arrow with the phrase "Stronger-than-expected performance; successful cost-control measures. " The second listing is Sony Corp. followed by a down arrow with the phrase "Weak sales and uncertainty regarding planned restructuring." The third listing is Thai Union Frozen Products followed by an up arrow with the phrase "Accelerating sales of tuna products."] "Currently, Asia is posting attractive relative trade figures." Currently, Asia is posting attractive relative trade figures. China, in particular, is experiencing strong export growth. China is a source of production for Taiwan, which has the technological know-how and the customer base while China supplies the manufacturing capacity and labor. Recently, Thailand has been the best-performing market in Asia. Thailand's financial sector is undergoing recovery and the government has placed a fiscal stimulus package in place. Now that the overhang of Iraq is behind us, we believe the financial markets should begin to normalize and investors should once again reward fundamental strength. This commentary reflects the views of the portfolio management team through the end of the Fund's period discussed in this report. The team's statements reflect their own opinions. As such, they are in no way guarantees of future events, and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant. International investing involves special risks such as political, economic and currency risks and differences in accounting standards and financial reporting. 1 Figures from Lipper, Inc. include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. A LOOK AT PERFORMANCE For the period ended April 30, 2003 The index used for comparison is the Morgan Stanley Capital International (MSCI) All Country Pacific Free Index, an unmanaged index composed of compa nies in Australia, Japan and certain other Pacific Basin countries. It is not possible to invest in an index. Class A Class B Class C Index Inception date 9-8-87 3-7-94 3-1-99 -- Average annual returns with maximum sales charge (POP) One year -32.22% -32.74% -30.55% -20.97% Five years -4.74% -4.81% -- -5.83% Ten years -3.22% -- -- -5.78% Since inception -- -6.47% -3.78% -- Cumulative total returns with maximum sales charge (POP) Six months -16.26% -16.55% -13.92% -4.98% One year -32.22% -32.74% -30.55% -20.97% Five years -21.55% -21.85% -- -25.94% Ten years -27.88% -- -- -44.87% Since inception -- -45.79% -14.82% -- Performance figures assume all distributions are reinvested. Returns with maximum sales charge reflect a sales charge on Class A shares of 5% and Class C shares of 1%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. The return and principal value of an investment in the Fund will fluctuate, so that shares, when redeemed, may be worth more or less than the original cost. Index figures do not reflect sales charges and would be lower if they did. The returns reflect past results and should not be considered indicative of future performance. The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. GROWTH OF $10,000 This chart shows what happened to a hypothetical $10,000 investment in Class A shares for the period indicated. For comparison, we've shown the same investment in the Morgan Stanley Capital International (MSCI) All Country Pacific Free Index. Line chart with the heading "GROWTH OF $10,000." Within the chart are three lines. The first line represents the value of the hypothetical $10,000 investment made in the John Hancock Pacific Basin Equities Fund, before sales charge, and is equal to $7,590 as of April 30, 2003. The second line represents the value of the same hypothetical investment made in the John Hancock Pacific Basin Equities Fund, after sales charge, and is equal to $7,212 as of April 30, 2003. The third line represents the Index and is equal to $5,513 as of April 30, 2003. Class B 1 Class C 1 Period beginning 3-7-94 3-1-99 Without sales charge $5,421 $8,603 With maximum sales charge -- $8,517 Index $5,350 $7,795 Assuming all distributions were reinvested for the period indicated, the table above shows the value of a $10,000 investment in the Fund's Class B and Class C shares, respectively, as of April 30, 2003. Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes. 1 No contingent deferred sales charge applicable. FINANCIAL STATEMENTS FUND'S INVESTMENTS This schedule is divided into four main categories: common stocks, preferred stocks, warrants and short-term investments. Common and preferred stocks and warrants are further broken down by country. Short-term investments, which represent the Fund's cash position, are listed last. Securities owned by the Fund on April 30, 2003 (unaudited)
SHARES ISSUER VALUE COMMON STOCKS 86.21% $14,802,491 (Cost $16,118,391) Australia 1.82% 311,960 38,900 Aristocrat Leisure, Ltd. (Leisure) 37,961 10,200 Australia & New Zealand Banking Group Ltd. (Banks -- Foreign) 118,999 7,000 Commonwealth Bank of Australia (Banks -- Foreign) 119,193 18,000 Qantas Airways Ltd. (Transportation) 35,807 China 5.30% 910,687 273,000 BYD Co., Ltd. (Electronics) 540,816 2,384,000 Sinopec Shanghai Petrochemical Co., Ltd.* (Chemicals) 369,871 Hong Kong 5.90% 1,014,020 342,000 China Resources Enterprise Ltd. (Diversified Operations) 271,879 25,500 CLP Holdings Ltd. (Utilities) 104,301 661,500 Dickson Concepts International Ltd. (Retail) 100,085 60,000 Henderson Land Development Co., Ltd. (Real Estate Operations) 148,864 794,000 Ngai Lik Industrial Holding Ltd. (Electronics) 185,289 177,000 TCL International Holdings Cos., Ltd. (Electronics) 33,135 78,000 Tingyi Holding Corp. (Food) 14,102 271,000 VTech Holdings Ltd. (Telecommunications) 156,365 Indonesia 2.38% 408,716 5,325,000 PT Bank Pan Indonesia Tbk (Banks -- Foreign) 144,276 5,255,500 PT Bentoel Internasional Investama Tbk* (Tobacco) 69,682 3,490,500 PT Perusahaan Perkebunan London Sumatra Indonesia Tbk* (Agricultural Operations) 152,924 88,500 PT Telekomunikasi Indonesia (Telecommunications) 41,834 Japan 36.71% 6,302,698 1,000 Aderans Co., Ltd. (Cosmetics & Personal Care) 18,321 67,000 Asahi Glass Co., Ltd. (Building) 356,742 3,000 Bridgestone Corp. (Rubber -- Tires & Misc) 34,035 6,000 Daiwa House Industry Co., Ltd. (Building) 36,223 54,000 Dowa Mining Co., Ltd. (Metal) 178,853 43 East Japan Railway Co. (Transportation) 194,701 5,600 Eneserve Corp. (Utilities) 196,277 2,100 Fanuc Ltd. (Electronics) 85,930 2,000 Funai Electric Co., Ltd. (Electronics) 201,241 101,000 Hitachi Ltd. (Electronics) 337,062 3,400 Hogy Medical Co., Inc. (Medical) 143,971 5,600 Honda Motor Co., Ltd. (Automobiles/Trucks) 185,477 7,300 Hoya Corp. (Electronics) 431,536 54,000 Jeol Ltd. (Instruments -- Scientific) 131,310 5,000 Kao Corp. (Cosmetics & Personal Care) 91,187 27,000 Kikkoman Corp. (Food) 168,212 620 Kose Corp. (Cosmetics & Personal Care) 19,651 7,300 Kyocera Corp. (Electronics) 356,247 1,200 Mabuchi Motor Co., Ltd. (Electronics) 89,653 44 Millea Holdings, Inc.* (Insurance) 285,561 87 Mitsubishi Tokyo Financial Group, Inc. (Banks -- Foreign) 294,717 1,200 Nintendo Co., Ltd. (Leisure) 93,778 4,800 Nissan Motor Co., Ltd. (Automobiles/Trucks) 36,827 700 Nitto Denko Corp. (Chemicals) 20,133 24 NTT DoCoMo, Inc. (Telecommunications) 49,505 5,000 Olympus Optical Co., Ltd. (Leisure) 86,576 6,000 Ricoh Co., Ltd. (Office) 92,017 9,900 Shin-Etsu Chemical Co., Ltd. (Chemicals) 296,353 800 SMC Corp. (Machinery) 60,238 36 Sparx Asset Management Co., Ltd. (Finance) 152,440 7,800 Takeda Chemical Industries, Ltd. (Medical) 285,813 14,500 THK Co., Ltd. (Machinery) 133,741 19,000 Tokai Rika Co., Ltd. (Automobiles/Trucks) 102,440 36,000 TonenGeneral Sekiyu K.K. (Oil & Gas) 228,811 24,700 Toyota Motor Corp. (Automobiles/Trucks) 559,198 500 Uni-Charm Corp. (Cosmetics & Personal Care) 19,914 1,500 Yamaichi Electronics Co., Ltd. (Electronics) 19,810 3,000 Yamato Transport Co., Ltd. (Transportation) 33,557 14,400 Yushin Precision Equipment Co., Ltd. (Machinery) 194,640 Malaysia 3.07% 526,815 205,000 Perusahaan Otomobil Nasional Berhad (Automobiles/Trucks) 339,868 96,000 Telekom Malaysia Berhad (Telecommunications) 186,947 Philippine Islands 2.47% 423,903 2,215,300 Ayala Land, Inc. (Real Estate Operations) 211,081 915,300 Manila Electric Co.* (Utilities) 178,787 4,700 Philippine Long Distance Telephone Co.* (Telecommunications) 34,035 Singapore 5.67% 973,310 1,013,000 Chartered Semiconductor Manufacturing Ltd.* (Electronics) 393,653 86,000 City Developments, Ltd. (Real Estate Operations) 163,708 343,000 Singapore Exchange Ltd. (Finance) 235,672 19,400 Singapore Press Holdings Ltd. (Media) 180,277 South Korea 13.51% 2,319,215 66,600 Hotel Shilla Co., Ltd. (Leisure) 254,889 26,700 Hyundai Department Store Co., Ltd. (Retail) 437,309 3,210 LG Ad, Inc. (Advertising) 42,668 680 LG Home Shopping, Inc. (Retail) 38,673 11,280 LG Household & Health Care Ltd. (Soap & Cleaning Preparations) 160,148 41,400 Shinhan Financial Group Co., Ltd. (Finance) 408,889 3,570 Shinsegae Co., Ltd. (Retail) 426,049 8,000 SK Telecom Co., Ltd. American Depositary Receipts (ADR) (Telecommunications) 121,600 91,940 Ssangyong Motor Co.* (Automobiles/Trucks) 395,002 1,780 You Eal Electronics Co., Ltd. (Telecommunications) 33,988 Taiwan 8.31% 1,427,672 579,000 Eva Airways Corp.* (Transportation) 177,719 44,000 Largan Precision Co., Ltd. (Leisure) 271,371 27,000 Nanya Technology Corp.* (Electronics) 14,716 112,000 Optimax Technology Corp.* (Electronics) 128,514 375,000 Siliconware Precision Industries Co.* (Electronics) 177,496 108,300 Siliconware Precision Industries Co.* (ADR) (Electronics) 258,837 291,000 Taiwan Semiconductor Manufacturing Co. Ltd.* (Electronics) 399,019 Thailand 1.07% 183,495 104,000 Bangkok Expressway Pcl (Building) 36,147 300,800 Thai Union Frozen Products Pcl (Food) 147,348 PREFERRED STOCKS 3.56% $611,942 (Cost $556,575) Japan 0.20% 34,337 6,000,000 SMFG Finance Ltd. (Banks -- Foreign) (R) 34,337 South Korea 3.36% 577,605 4,710 Samsung Electronics Co., Ltd. (Electronics) 577,605 WARRANTS 4.21% 722,338 (Cost $739,482) India 4.21% 722,338 115,000 Hindustan Lever Ltd.* (Soap & Cleaning Preparations) 350,808 6,300 Infosys Technologies Ltd.* (Computers) 371,530 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS 2.91% $499,000 (Cost $499,000) Joint Repurchase Agreement 2.91% Investment in a joint repurchase agreement transaction with State Street Bank & Trust Co. -- Date 04-30-03, due 05-01-03 (Secured by U.S. Treasury Inflation Indexed Bond 3.875% due 04-15-29, U.S. Treasury Inflation Indexed Notes 3.875% due 01-15-07 and 3.000% due 07-15-12) 1.280% $499 499,000 TOTAL INVESTMENTS 96.89% $16,635,771 OTHER ASSETS AND LIABILITIES, NET 3.11% $533,888 TOTAL NET ASSETS 100.00% $17,169,659
* Non-income-producing security. (R) This security is exempt from registration under rule 144A of the Securities Act of 1933. Such security may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $34,337 or 0.20% of net assets as of April 30, 2003. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements. PORTFOLIO CONCENTRATION April 30, 2003 (unaudited) This table shows the percentages of the Fund's investments aggregated by various industries. VALUE AS A PERCENTAGE INVESTMENT CATEGORIES OF NET ASSETS Advertising 0.25% Agricultural Operations 0.89 Automobiles/Trucks 9.43 Banks -- Foreign 4.14 Building 2.50 Chemicals 4.00 Computers 2.16 Cosmetics & Personal Care 0.87 Diversified Operations 1.58 Electronics 24.64 Finance 4.64 Food 1.92 Instruments -- Scientific 0.76 Insurance 1.66 Leisure 4.34 Machinery 2.26 Media 1.05 Medical 2.50 Metal 1.04 Office 0.54 Oil & Gas 1.33 Real Estate Operations 3.05 Retail 5.84 Rubber -- Tires & Misc. 0.20 Soap & Cleaning Preparations 2.98 Telecommunications 3.64 Tobacco 0.41 Transportation 2.57 Utilities 2.79 Short-term investments 2.91 Total investments 96.89% See notes to financial statements. ASSETS AND LIABILITIES April 30, 2003 (unaudited) This Statement of Assets and Liabilities is the Fund's balance sheet. It shows the value of what the Fund owns, is due and owes. You'll also find the net asset value and the maximum offering price per share. ASSETS Investments at value (cost $17,913,448) $16,635,771 Cash 670 Foreign cash at value (cost $527,101) 528,259 Receivable for investments sold 449,526 Receivable for shares sold 95,000 Dividends and interest receivable 78,248 Other assets 4,144 Total assets 17,791,618 LIABILITIES Payable for investments purchased 497,385 Payable for shares repurchased 2,130 Payable to affiliates 58,681 Other payables and accrued expenses 63,763 Total liabilities 621,959 NET ASSETS Capital paid-in 34,384,832 Accumulated net realized loss on investments and foreign currency transactions (15,848,143) Net unrealized depreciation of investments and translation of assets and liabilities in foreign currencies (1,274,216) Accumulated net investment loss (92,814) Net assets $17,169,659 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($9,032,368 [DIV] 1,110,201 shares) $8.14 Class B ($7,489,200 [DIV] 978,115 shares) $7.66 Class C ($648,091 [DIV] 84,640 shares) $7.66 MAXIMUM OFFERING PRICE PER SHARE Class A 1 ($8.14 [DIV] 95%) $8.57 Class C ($7.66 [DIV] 99%) $7.74 1 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. OPERATIONS For the period ended April 30, 2003 (unaudited) 1 This Statement of Operations summarizes the Fund's investment income earned and expenses incurred in operat- ing the Fund. It also shows net gains (losses) for the period stated. INVESTMENT INCOME Dividends (net of foreign withholding taxes of $37,850) $239,603 Interest 3,938 Total investment income 243,541 EXPENSES Investment management fee 81,090 Class A distribution and service fee 15,256 Class B distribution and service fee 46,337 Class C distribution and service fee 4,171 Transfer agent fee 98,246 Custodian fee 35,982 Registration and filing fee 20,390 Auditing fee 16,282 Printing 8,735 Accounting and legal services fee 4,363 Interest expense 1,081 Trustee's fee 698 Miscellaneous 460 Legal fee 176 Total expenses 333,267 Net investment loss (89,726) REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on Investments (2,111,563) Foreign currency transactions (162,904) Change in unrealized appreciation (depreciation) of Investments (26,106) Translation of assets and liabilities in foreign currencies 19 Net realized and unrealized loss (2,300,554) Decrease in net assets from operations ($2,390,280) 1 Semiannual period from 11-1-02 through 4-30-03. See notes to financial statements. CHANGES IN NET ASSETS This Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the previous period. The dif- ference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and any increase or decrease in money share- holders invested in the Fund. YEAR PERIOD ENDED ENDED 10-31-02 4-30-03 1 INCREASE (DECREASE) IN NET ASSETS From operations Net investment loss ($368,514) ($89,726) Net realized gain (loss) 476,358 (2,274,467) Change in net unrealized appreciation (depreciation) (1,094,526) (26,087) Decrease in net assets resulting from operations (986,682) (2,390,280) From Fund share transactions (2,622,422) (2,616,983) NET ASSETS Beginning of period 25,786,026 22,176,922 End of period 2 $22,176,922 $17,169,659 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Includes accumulated net investment loss of $3,088 and $92,814, respectively. See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS A SHARES The Financial Highlights show how the Fund's net asset value for a share has changed since the end of the previous period. PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $11.63 $8.76 $14.46 $14.02 $9.62 $9.23 Net investment income (loss)2 0.02 (0.09) (0.14) (0.08) (0.10) (0.02) Net realized and unrealized gain (loss) on investments (2.89) 5.79 0.08 (4.32) (0.29) (1.07) Total from investment operations (2.87) 5.70 (0.06) (4.40) (0.39) (1.09) Less distributions From net investment income -- -- (0.37) -- -- -- In excess of net investment income -- -- (0.01) -- -- -- -- -- (0.38) -- -- -- Net asset value, end of period $8.76 $14.46 $14.02 $9.62 $9.23 $8.14 Total return 3 (%) (24.68) 65.07 (0.57) (31.38) (4.05) (11.81) 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $15 $33 $23 $12 $11 $9 Ratio of expenses to average net assets (%) 2.46 2.37 2.06 2.67 2.57 2.94 5 Ratio of net investment income (loss) to average net assets (%) 0.22 (0.77) (0.81) (0.64) (0.99) (0.52) 5 Portfolio turnover (%) 230 174 258 448 293 148
See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS B SHARES PERIOD ENDED 10-31-98 10-31-99 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $11.32 $8.47 $13.89 $13.43 $9.15 $8.72 Net investment loss 2 (0.04) (0.17) (0.25) (0.15) (0.17) (0.05) Net realized and unrealized gain (loss) on investments (2.81) 5.59 0.09 (4.13) (0.26) (1.01) Total from investment operations (2.85) 5.42 (0.16) (4.28) (0.43) (1.06) Less distributions From net investment income -- -- (0.29) -- -- -- In excess of net investment income -- -- (0.01) -- -- -- -- -- (0.30) -- -- -- Net asset value, end of period $8.47 $13.89 $13.43 $9.15 $8.72 $7.66 Total return 3 (%) (25.18) 63.99 (1.30) (31.87) (4.70) (12.16) 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $13 $37 $29 $14 $10 $7 Ratio of expenses to average net assets (%) 3.16 3.07 2.77 3.37 3.27 3.64 5 Ratio of net investment loss to average net assets (%) (0.48) (1.47) (1.51) (1.36) (1.69) (1.25) 5 Portfolio turnover (%) 230 174 258 448 293 148
See notes to financial statements.
FINANCIAL HIGHLIGHTS CLASS C SHARES PERIOD ENDED 10-31-99 6 10-31-00 10-31-01 10-31-02 4-30-03 1 PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $9.09 $13.89 $13.43 $9.15 $8.72 Net investment loss 2 (0.13) (0.24) (0.17) (0.17) (0.05) Net realized and unrealized gain (loss) on investments 4.93 0.08 (4.11) (0.26) (1.01) Total from investment operations 4.80 (0.16) (4.28) (0.43) (1.06) Less distributions From net investment income -- (0.29) -- -- -- In excess of net investment income -- (0.01) -- -- -- -- (0.30) -- -- -- Net asset value, end of period $13.89 $13.43 $9.15 $8.72 $7.66 Total return 3 (%) 52.81 4 (1.30) (31.87) (4.70) (12.16) 4 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $1 -- 7 $1 $1 Ratio of expenses to average net assets (%) 3.14 5 2.77 3.37 3.27 3.64 5 Ratio of net investment loss to average net assets (%) (1.76) 5 (1.48) (1.48) (1.69) (1.28) 5 Portfolio turnover (%) 174 258 448 293 148 1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. 2 Based on the average of the shares outstanding. 3 Assumes dividend reinvestment and does not reflect the effect of sales charges. 4 Not annualized. 5 Annualized. 6 Class C shares began operations on 3-1-99. 7 Less than $500,000.
See notes to financial statements. NOTES TO STATEMENTS Unaudited NOTE A Accounting policies John Hancock Pacific Basin Equities Fund (the "Fund") is a diversified series of John Hancock World Fund, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to seek long-term capital appreciation. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B and Class C shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or, if quotations are not readily available or the value has been materially affected by events occurring after the closing of a foreign market, at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. All portfolio transactions initially expressed in terms of foreign currencies have been translated into U.S. dollars as described in "Foreign currency translation" below. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times. Foreign currency translation All assets or liabilities initially expressed in terms of foreign currencies are translated into U.S. dollars based on London currency exchange quotations as of 5:00 P.M., London time, on the date of any determination of the net asset value of the Fund. Transactions affecting statement of operations accounts and net realized gain (loss) on investments are translated at the rates prevailing at the dates of the transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, other than investments in securities, resulting from changes in the exchange rates. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Capital gains realized on some foreign securities are subject to foreign taxes, which are accrued as applicable. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net assets of the respective classes. Distribution and service fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rate(s) applicable to each class. Expenses The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. Bank borrowings The Fund is permitted to have bank borrowings for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Fund has entered into a syndicated line of credit agreement with various banks. This agreement enables the Fund to participate with other funds managed by the Adviser in an unsecured line of credit with banks, which permits borrowings of up to $250 million, collectively. Interest is charged to each fund, based on its borrowing. In addition, a commitment fee is charged to each fund based on the average daily unused portion of the line of credit and is allocated among the participating funds. The Fund had no borrowing activity under the line of credit during the period ended April 30, 2003. Forward foreign currency exchange contracts The Fund may enter into forward foreign currency exchange contracts as a hedge against the effect of fluctuations in currency exchange rates. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date at a set price. The aggregate principal amounts of the contracts are marked to market daily at the applicable foreign currency exchange rates. Any resulting unrealized gains and losses are included in the determination of the Fund's daily net assets. The Fund records realized gains and losses at the time the forward foreign currency exchange contracts are closed out. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of the contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. These contracts involve market or credit risk in excess of the unrealized gain or loss reflected in the Fund's statement of assets and liabilities. The Fund may also purchase and sell forward contracts to facilitate the settlement of foreign currency denominated portfolio transactions, under which it intends to take delivery of the foreign currency. Such contracts normally involve no market risk if they are offset by the currency amount of the underlying transactions. The Fund had no open forward foreign currency exchange contracts on April 30, 2003. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $13,280,111 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The entire amount of the loss carryforward expires October 31, 2009. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, capital gains and repatriation taxes imposed by certain countries in which the Fund invests, which are accrued as applicable. The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a quarterly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.80% of the first $200,000,000 of the Fund's average daily net asset value and (b) 0.70% of the Fund's average daily net asset value in excess of $200,000,000. The Adviser has a subadvisory agreement with Nicholas-Applegate Capital Management LP. The Fund is not responsible for payment of the subadvisory fees. The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net assets and 1.00% of Class B and Class C average daily net assets. A maximum of 0.25% of such payments may be service fees as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Class A and Class C shares are assessed up-front sales charges. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $5,073 with regard to sales of Class A shares. Of this amount, $619 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $3,075 was paid as sales commissions to unrelated broker-dealers and $1,379 was paid as sales commissions to sales personnel of Signator Investors, Inc. ("Signator Investors"), a related broker-dealer. The Adviser's indirect parent, John Hancock Life Insurance Company ("JHLICo"), is the indirect sole shareholder of Signator Investors. During the period ended April 30, 2003, JH Funds received net up-front sales charges of $1,632 with regard to sales of Class C shares. Of this amount, $1,626 was paid as sales commissions to unrelated broker-dealers and $6 was paid as sales commissions to sales personnel of Signator Investors. Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used in whole or in part to defray its expenses for providing distribution-related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2003, CDSCs received by JH Funds amounted to $11,702 for Class B shares and $523 for Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of JHLICo. The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.04% of the average net assets of the Fund. Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund's deferred compensation liability are recorded on the Fund's books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investments as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund. NOTE C Fund share transactions This listing illustrates the number of Fund shares sold and repurchased during the last two periods, along with the corresponding dollar value. The Fund has an unlimited number of shares authorized with no par value.
YEAR ENDED 10-31-02 PERIOD ENDED 4-30-03 1 SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Sold 1,121,272 $11,813,825 606,875 $5,327,726 Repurchased (1,180,930) (12,396,555) (662,588) (5,889,872) Net decrease (59,658) ($582,730) (55,713) ($562,146) CLASS B SHARES Sold 508,893 $5,177,571 33,473 $282,745 Repurchased (794,841) (7,929,140) (254,031) (2,124,914) Net decrease (285,948) ($2,751,569) (220,558) ($1,842,169) CLASS C SHARES Sold 369,684 $3,661,327 46,586 $408,780 Repurchased (304,259) (2,949,450) (71,767) (621,448) Net increase (decrease) 65,425 $711,877 (25,181) ($212,668) NET DECREASE (280,181) ($2,622,422) (301,452) ($2,616,983)
1 Semiannual period from 11-1-02 through 4-30-03. Unaudited. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, including short-term securities and obligations of the U.S. government, during the period ended April 30, 2003, aggregated $28,757,593 and $31,686,830, respectively. The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $18,207,013. Gross unrealized appreciation and depreciation of investments aggregated $564,675 and $2,135,917, respectively, resulting in net unrealized depreciation of $1,571,242. The difference between book basis and tax basis net unrealized depreciation of investments is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on certain forward foreign currency contracts. FOR YOUR INFORMATION TRUSTEES Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove John M. DeCiccio Richard A. Farrell Maureen R. Ford William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt *Members of the Audit Committee OFFICERS Maureen R. Ford Chairman, President and Chief Executive Officer William L. Braman Executive Vice President and Chief Investment Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer Thomas H. Connors Vice President and Compliance Officer INVESTMENT ADVISER John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 SUBADVISER Nicholas-Applegate Capital Management LP 600 West Broadway San Diego, California 92101 PRINCIPAL DISTRIBUTOR John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 CUSTODIAN The Bank of New York One Wall Street New York, New York 10286 TRANSFER AGENT John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 LEGAL COUNSEL Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109-1803 HOW TO CONTACT US On the Internet www.jhfunds.com By regular mail John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, MA 02217-1000 By express mail John Hancock Signature Services, Inc. Attn: Mutual Fund Image Operations 529 Main Street Charlestown, MA 02129 Customer service representatives 1-800-225-5291 24-hour automated information 1-800-338-8080 TDD line 1-800-554-6713 [A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner. A tag line below reads "JOHN HANCOCK FUNDS."] 1-800-225-5291 1-800-554-6713 (TDD) 1-800-338-8080 EASI-Line www.jhfunds.com Now available: electronic delivery www.jhancock.com/funds/edelivery This report is for the information of the shareholders of the John Hancock Pacific Basin Equities Fund. 580SA 4/03 6/03 - -------------------------------------------------------------------------------- SEMI ANNUAL REPORT John Hancock International Small Cap Growth Fund APRIL 30, 2003 - -------------------------------------------------------------------------------- John Hancock International Small Cap Growth Fund Schedule of Investments April 30, 2003 (Unaudited) ISSUER SHARES VALUE - ------ ------ ----- COMMON STOCKS Argentina (0.50%) BBVA Banco Frances SA* (Banks - Foreign) 2,000 $11,100 -------- Austria (1.89%) Erste Bank der oesterreichischen Sparkassen AG (Banks - Foreign) 320 25,320 OMV AG (Oil & Gas) 100 12,008 Voestalpine AG (Steel) 152 4,275 -------- 41,603 -------- Belgium (1.04%) Colruyt SA (Retail) 200 13,068 Mobistar SA* (Telecommunications) 300 9,776 -------- 22,844 -------- Brazil (1.21%) Companhia Paranaense de Energia-Copel American Despositary Receipts (ADR) (Utilities) 4,800 15,552 Empresa Brasileira de Aeronautica SA (ADR) (Aerospace) 800 11,096 -------- 26,648 -------- Canada (12.48%) Abitibi-Consolidated, Inc. (Paper & Paper Products) 1,500 10,508 Ballard Power Systems, Inc.* (Electronics) 600 6,145 Bonavista Petroleum Ltd.* (Oil & Gas) 200 4,684 Canadian 88 Energy Corp.* (Oil & Gas) 2,600 3,933 Cequel Energy, Inc.* (Oil & Gas) 1,300 5,709 Compton Petroleum Corp.* (Oil & Gas) 1,300 4,848 Cott Corp.* (Beverages) 1,200 22,020 CP Ships Ltd. (Transport) 600 8,762 Dofasco, Inc. (Steel) 700 13,389 Finning Internatonal, Inc. (Machinery) 1,000 19,657 Gildan Activewear, Inc.* (Retail) 300 8,277 Industrial Alliance Life Insurance Co. (Insurance) 600 15,621 IPSCO, Inc. (Steel) 1,100 9,201 Ketch Resources Ltd.* (Oil & Gas) 900 3,733 Kingsway Financial Services, Inc.* (Insurance) 400 4,601 Kingsway Financial Services, Inc.* (USD)(Insurance) 900 10,278 Masonite International Corp.* (Building) 500 8,522 Molson, Inc. (A Shares) (Beverages) 900 20,703 Olympia Energy, Inc.* (Oil & Gas) 1,000 2,572 Precision Drilling Corp.* (Oil & Gas) 700 24,066 Progress Energy Ltd.* (Oil & Gas) 900 5,458 RONA, inc.* (Retail) 1,700 18,687 Saputo, Inc. (Food) 700 12,320 Teck Cominco Ltd. (Class B) (Metal) 1,260 9,011 Tesco Corp.* (Oil & Gas) 900 9,536 Thunder Energy, Inc.* (Oil & Gas) 900 3,952 WestJet Airlines Ltd.* (Transport) 750 8,626 -------- 274,819 -------- China (0.54%) BYD Co., Ltd. (Electronics) 6,000 11,886 -------- Denmark (2.09%) Coloplast AS (Medical) 200 14,791 Danisco AS (Food) 500 18,263 Jyske Bank AS* (Banks - Foreign) 400 13,047 -------- 46,101 -------- Finland (1.12%) Sampo Oyj (A Shares) (Finance) 3,400 24,664 -------- See notes to financial statements. 1 ISSUER SHARES VALUE - ------ ------ ----- France (7.03%) Business Objects SA* (ADR) (Computers) 300 $6,519 Cap Gemini SA* (Computers) 1,000 31,114 CNP Assurances SA (Insurance) 300 12,059 Dassault Systemes SA (Computers) 400 11,557 Essilor International SA (Retail) 300 12,284 JC Decaux SA* (Advertising) 1,800 17,376 Pechiney SA (Metal) 300 8,655 Pernod-Ricard SA (Beverages) 150 13,166 Thales SA (Electronics) 338 9,042 Unibail SA (Real Estate Operations) 200 13,381 Vinci SA (Engineering / R&D Services) 300 19,535 -------- 154,688 -------- Germany (4.75%) Continental AG* (Rubber - Tires & Misc.) 600 10,647 Deutsche Boerse AG (Finance) 600 27,855 Fraport AG (Transportation) 400 8,080 Medion AG (Business Services - Misc.) 400 14,776 Schwarz Pharma AG (Medical) 400 17,142 SGL Carbon AG* (Chemicals) 700 10,273 Stada Arzneimittel AG (Medical) 300 15,685 -------- 104,458 -------- Greece (0.40%) Coca-Cola Hellenic Bottling Co. SA (Beverages) 600 8,772 -------- Hong Kong (0.50%) Cathay Pacific Airways Ltd. (Transportation) 9,000 10,956 -------- India (0.71%) Ranbaxy Laboratories Ltd. Global Despositary Receipts (Medical) 360 5,627 Saytam Computer Services Ltd. (ADR) (Computers) 1,300 10,010 -------- 15,637 -------- Ireland (3.00%) Anglo Irish Bank Corp. Plc (Banks - Foreign) 4,600 34,600 Greencore Group Plc (Food) 1,900 5,831 Irish Life & Permanent Plc (Finance) 2,200 25,520 -------- 65,951 -------- Israel (0.62%) Taro Pharmaceutical Industries Ltd.* (Medical) 300 13,728 -------- Italy (4.05%) Banco Popolare di Verona e Novara Scrl (Banks - Foreign) 2,000 27,163 ERG SpA (Oil & Gas) 1,300 5,774 Impregilo SpA* (Building) 35,000 14,843 Italcementi SpA (Building) 2,500 26,114 Saipem SpA (Oil & Gas) 2,200 15,345 -------- 89,239 -------- Japan (13.14%) Bank of Yokohama, Ltd. (Banks - Foreign) 4,000 14,120 Capcom Co., Ltd. (Computers) 700 5,588 Eneserve Corp. (Utilities) 200 7,010 Funai Electric Co., Ltd. (Electronics) 100 10,062 Hogy Medical Co., Inc. (Medical) 200 8,469 JSR Corp. (Rubber - Tires & Misc) 1,000 10,431 Keihin Electric Express Railway Co., Ltd. (Transport) 2,000 9,576 Komatsu Ltd. (Machinery) 8,000 30,522 Konica Corp. (Office) 1,000 9,148 Kose Corp. (Cosmetics & Personal Care) 430 13,629 Mitsui Mining & Smelting Co., Ltd. (Metal) 6,000 15,747 Nichii Gakkan Co. (Medical) 200 10,196 Nidec Corp. (Machinery) 300 15,823 Nippon Electric Glass Co., Ltd. (Electronics) 1,000 10,951 See notes to financial statements. 2 ISSUER SHARES VALUE - ------ ------ ----- Japan - Continued Nitto Denko Corp. (Chemicals) 600 $17,256 NSK Ltd. (Metal) 6,000 15,999 Pioneer Corp. (Electronics) 500 10,020 Shizuoka Bank Ltd. (Banks - Foreign) 2,000 13,215 THK Co., Ltd. (Machinery) 900 8,301 Toho Gas Co., Ltd. (Oil & Gas) 4,000 11,102 TonenGeneral Sekiyu K.K. (Oil & Gas) 3,000 19,068 UMC Japan* (Electronics) 9 7,094 Uni-Charm Corp. (Cosmetics & Personal Care) 400 15,932 -------- 289,259 -------- Luxembourg (0.31%) Tenaris SA* (Oil & Gas) 211 527 Tenaris SA* (ADR) (Oil & Gas) 264 6,204 -------- 6,731 -------- Netherlands (2.19%) Euronext NV (Finance) 700 15,468 Fugro NV (Engineering / R&D Services) 300 12,170 IHC Caland NV (Oil & Gas) 300 15,484 Rodamco Europe NV (Real Estate Operations) 104 5,055 -------- 48,177 -------- Norway (1.64%) Frontline Ltd. (Transportation) 1,300 13,747 Gjensidige NOR ASA* (Finance) 450 15,594 ProSafe ASA * (Oil & Gas) 400 6,745 -------- 36,086 -------- Portugal (0.76%) Brisa-Auto Estrada de Portugal SA (Transportation) 3,100 16,710 -------- Russia (0.36%) VimpelCom* (ADR) (Telecommunications) 200 7,972 -------- Singapore (0.50%) Singapore Exchange Ltd. (Finance) 16,000 10,993 -------- South Korea (2.33%) Kumgang Korea Chemical Co., Ltd. (Building) 150 12,778 LG Home Shopping, Inc. (Retail) 100 5,687 Samsung SDI Co., Ltd. (Electronics) 100 6,255 Shinsegae Co., Ltd. (Retail) 100 11,934 SK Corp. (Oil & Gas) 860 7,078 You Eal Electronics Co., Ltd. (Telecommunications) 400 7,638 -------- 51,370 -------- Spain (7.29%) Acciona SA (Building) 300 14,396 Acesa Infraestructuras SA (Transportation) 1,900 24,703 Actividades de Construccion y Servicios SA (Building) 600 22,599 Altadis SA (Tobacco) 800 20,624 Bankinter SA (Banks - Foreign) 500 15,272 Corporacion Mapfre SA (Insurance) 2,500 23,436 Ebro Puleva SA (Food) 1,300 11,331 Iberia Lineas Aereas de Espana SA (Transport) 5,900 10,337 Red Electrica de Espana SA (Utilities) 1,500 17,828 -------- 160,526 -------- Sweden (3.45%) Autoliv, Inc. Swedish Depositary Receipts (Automobiles/Trucks) 600 14,670 Billerud AB (Paper & Paper Products) 600 7,959 Elekta AB (B Shares)* (Medical) 2,000 21,761 Gambro AB (B Shares) (Medical) 800 4,518 SKF AB (B Shares) (Metal) 400 11,590 Swedish Match AB (Tobacco) 2,100 15,532 -------- 76,030 -------- See notes to financial statements. 3 ISSUER SHARES VALUE - ------ ------ ----- Switzerland (2.91%) Actelion Ltd.* (Medical) 300 $19,210 Converium Holding AG* (Insurance) 300 13,548 Logitech International AG* (Computers) 300 11,059 Saurer AG* (Machinery) 300 7,841 Swiss Life Holding (Insurance) 200 12,505 --------- 64,163 --------- Taiwan (0.22%) Siliconware Precision Industries Co. * (ADR) (Electronics) 2,000 4,780 --------- United Kingdom (17.30%) Acambis Plc* (Medical) 3,400 15,487 Amvescap Plc (Finance) 2,153 11,700 Arriva Plc (Transportation) 3,000 15,367 Cattles Plc (Finance) 3,400 17,280 Close Brothers Group Plc (Finance) 1,600 13,790 Cobham Plc (Aerospace) 700 12,866 easyJet Plc* (Transportation) 3,900 11,781 Exel Plc (Transporttion) 1,300 12,466 Friends Provident Plc (Insurance) 12,800 20,100 GKN Plc (Automobiles/Trucks) 4,500 14,816 Kelda Group Plc (Utilities) 3,000 19,731 Kidde Plc (Protection - Safety Equipment & Services) 4,400 5,063 Man Group Plc (Finance) 1,500 25,292 Northern Rock Plc (Banks - Foreign) 2,000 22,871 Peninsular and Oriental Steam Navigation Co. (Transportation) 5,300 16,349 Schroders Plc (Finance) 1,900 18,456 Severn Trent Plc (Utilities) 1,957 22,364 SIG Plc (Building) 2,500 9,310 Signet Group Plc (Retail) 8,800 11,814 SkyePharma Plc* (Medical) 15,600 12,342 Smith & Nephew Plc (Medical) 3,100 20,673 Smiths Group Plc (Manufacturing) 1,600 17,108 Taylor Woodrow Plc (Building) 3,700 11,591 Tullow Oil Plc* (Oil & Gas) 9,500 10,487 Wood Group (John) Plc (Oil & Gas) 4,720 11,749 --------- 380,853 --------- United States (1.47%) deCode genetics, Inc.* (Medical) 4,000 8,400 Ultra Petroleum Corp.* (Oil & Gas) 2,400 24,000 --------- 32,400 --------- TOTAL COMMON STOCKS (95.80%) (Cost $1,966,442) 2,109,144 --------- PREFERRED STOCKS Germany (1.59%) Henkel KGaA (Chemicals) 200 12,879 Wella AG (Cosmetics & Personal Care) 300 22,231 --------- 35,110 --------- TOTAL PREFERRED STOCKS (1.59%) (Cost $29,565) 35,110 --------- WARRANTS India (0.39%) Ranbaxy Laboratories Ltd.* (Medical) 600 8,559 --------- 8,559 --------- TOTAL WARRANTS (0.39%) (Cost $8,108) 8,559 --------- See notes to financial statements. 4
INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000'S OMITTED) VALUE - --------------------------------------- --------- -------------- ----------- SHORT-TERM INVESTMENTS Joint Repurchase Agreement (4.45%) (Cost $98,000) Investment in a joint repurchase agreement transaction with State Street Bank & Trust Co. - Date 04-30-03, due 05-01-03 (Secured by U.S. Treasury Inflation Indexed Bond 3.875% due 04-15-29, U.S. Treasury Inflation Indexed Notes 3.875% due 01-15-07 and 3.000% due 07-15-12) 1.280% $98 $98,000 ---------- TOTAL INVESTMENTS 102.23% 2,250,813 ---------- OTHER ASSETS AND LIABILITIES, NET (2.23%) (49,159) ---------- TOTAL NET ASSETS 100.00% $2,201,654 ==========
* Non-income producing security. The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund. See notes to financial statements. 5 Portfolio Concentration (unaudited) VALUE AS A PERCENTAGE INVESTMENT CATEGORIES OF NET ASSETS - --------------------- ---------------- Advertising 0.79 % Aerospace 1.09 Automobiles/Trucks 1.34 Banks - Foreign 8.03 Beverages 2.94 Building 5.46 Business Services - Misc 0.67 Chemicals 1.83 Computers 3.44 Cosmetics & Personal Care 2.35 Electronics 3.46 Engineering / R&D Services 1.44 Finance 9.38 Food 2.17 Insurance 5.09 Machinery 3.73 Manufacturing 0.78 Medical 8.93 Metal 2.77 Office 0.42 Oil & Gas 9.72 Paper & Paper Products 0.84 Protection - Safety Equipment & Services 0.23 Real Estate Operations 0.84 Retail 3.71 Rubber - Tires & Misc 0.96 Steel 1.22 Telecommunications 1.15 Tobacco 1.64 Transportation 7.61 Utilities 3.75 Short-term investments 4.45 ------ Total investments 102.23 % ====== See notes to financial statements. 6 John Hancock International Small Cap Growth Fund ASSETS AND ASSETS LIABILITIES Investments at value (cost - $2,102,115) $2,250,813 April 30, 2003 Cash 58 Unaudited. Foreign cash at value (cost - $9,509) 9,688 Receivable for investments sold 12,557 Dividends and interest receivable 9,675 Other assets 11 Total assets 2,282,802 LIABILITIES Payable for investments purchased 45,779 Payable to affiliates 1,876 Other payables and accrued expenses 33,493 Total liabilities 81,148 NET ASSETS Capital paid-in 2,987,626 Accumulated net realized loss on investments and foreign currency transactions (926,853) Net unrealized appreciation of investments and translation of assets and liabilities in foreign currencies 149,023 Accumulated net investment income 858 Net assets $2,201,654 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($2,158,046 / 294,000 shares) $7.34 Class B ( $21,804 / 3,000 shares) $7.27 Class C ( $21,804 / 3,000 shares) $7.27 MAXIMUM OFFERING PRICE PER SHARE Class A(1) ($7.34 / 95%) $7.73 Class C ($7.27 / 99%) $7.34
(1) On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. 7 John Hancock International Small Cap Growth Fund OPERATIONS INVESTMENT INCOME For the period ended Dividends (net of foreign withholding taxes of $3,320) $17,077 April 30, 2003 Interest 621 (Unaudited) (1) Total investment income 17,698 EXPENSES Investment management fee 10,481 Class A distribution and service fee 3,082 Class B distribution and service fee 78 Class C distribution and service fee 78 Custodian fee 27,498 Printing 8,034 Auditing fee 7,438 Registration and filing fee 1,422 Accounting and legal services fee 282 Transfer agent fee 155 Trustees' fee 67 Miscellaneous 23 Legal fee 8 Total expenses 58,646 Less expense reductions (41,782) Net expenses 16,864 Net investment income 834 REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on Investments (192,733) Foreign currency transactions (1,482) Change in net unrealized appreciation (depreciation) of Investments 274,874 Translation of assets and liabilities in foreign currencies 104 Net realized and unrealized gain 80,763 Increase in net assets from operations $81,597
(1) Semiannual period from 11-1-02 through 4-30-03. See notes to financial statements. 8 John Hancock International Small Cap Growth Fund
YEAR ENDED PERIOD ENDED 10-31-02 4-30-03(1) CHANGES IN INCREASE (DECREASE) IN NET ASSETS NET ASSETS From operations Net investment income (loss) ($2,068) $834 Net realized loss (459,945) (194,215) Change in net unrealized appreciation (depreciation) 78,819 274,978 Increase (decrease) in net assets resulting from operations (383,194) 81,597 NET ASSETS Beginning of period 2,503,251 2,120,057 End of period (2) $2,120,057 $2,201,654
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited. (2) Includes accumulated net investment income of $24 and $858, respectively. See notes to financial statements. 9 John Hancock International Small Cap Growth Fund Financial Highlights CLASS A PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $8.34 $7.07 Net investment loss(3) (0.01) (0.01) --(4) Net realized and unrealized gain (loss) on investments (1.65) (1.26) 0.27 Total from investment operations (1.66) (1.27) 0.27 Net asset value, end of period $8.34 $7.07 $7.34 Total return(5,6)(%) (16.60)(7) (15.23) 3.82(7) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $2 $2 $2 Ratio of expenses to average net assets (%) 1.60(8) 1.60 1.60(8) Ratio of adjusted expenses to average net assets(9)(%) 9.61(8) 7.51 5.59(8) Ratio of net investment income (loss) to average net assets (%) (0.21)(8) (0.07) 0.09(8) Portfolio turnover (%) 59 153 51
See notes to financial statements. 10 John Hancock International Small Cap Growth Fund Financial Highlights CLASS B PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $8.32 $7.01 Net investment loss(3) (0.03) (0.04) (0.01) Net realized and unrealized gain (loss) on investments (1.65) (1.27) 0.27 Total from investment operations (1.68) (1.31) 0.26 Net asset value, end of period $8.32 $7.01 $7.27 Total return(5,6)(%) (16.80)(7) (15.75) 3.71(7) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) --(10) --(10) --(10) Ratio of expenses to average net assets (%) 2.30(8) 2.07 2.05(8) Ratio of adjusted expenses to average net assets(9)(%) 10.31(8) 7.98 6.04(8) Ratio of net investment loss to average net assets (%) (0.92)(8) (0.54) (0.36)(8) Portfolio turnover (%) 59 153 51
See notes to financial statements. 11 John Hancock International Small Cap Growth Fund Financial Highlights CLASS C
PERIOD ENDED 10-31-01 (1) 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $8.32 $7.01 Net investment loss(3) (0.03) (0.04) (0.01) Net realized and unrealized gain (loss) on investments (1.65) (1.27) 0.27 Total from investment operations (1.68) (1.31) 0.26 Net asset value, end of period $8.32 $7.01 $7.27 Total return(5,6)(%) (16.80)(7) (15.75) 3.71(7) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) --(10) --(10) --(10) Ratio of expenses to average net assets (%) 2.30(8) 2.07 2.05(8) Ratio of adjusted expenses to average net assets(9)(%) 10.31(8) 7.98 6.04(8) Ratio of net investment loss to average net assets (%) (0.92)(8) (0.54) (0.36)(8) Portfolio turnover (%) 59 153 51
(1) Class A, Class B and Class C shares began operations on 6-1-01. (2) Semiannual period from 11-01-02 through 4-30-03. Unaudited. (3) Based on the average of the shares outstanding. (4) Less than $0.01per share. (5) Assumes dividend reinvestment and does not reflect the effect of sales charges. (6) Total returns would have been lower had certain expenses not been reduced during the periods shown. (7) Not annualized. (8) Annualized. (9) Does not take into consideration expense reductions during the periods shown. (10) Less than $500,000. See notes to financial statements. 12 NOTES TO FINANCIAL STATEMENTS Unaudited NOTE A Accounting policies John Hancock International Small Cap Growth Fund (the "Fund") is a diversified series of John Hancock World Fund, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to achieve long-term capital appreciation. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B and Class C shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or, if quotations are not readily available, or the value has been materially affected by events occurring after the closing of a foreign market, at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. All portfolio transactions initially expressed in terms of foreign currencies have been translated into U.S. dollars as described in "Foreign currency translation" below. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times. Foreign currency translation All assets or liabilities initially expressed in terms of foreign currencies are translated into U.S. dollars based on London currency exchange quotations as of 5:00 P.M., London time, on the date of any determination of the net asset value of the Fund. Transactions affecting statement of operations accounts and net realized gain (loss) on investments are translated at the rates prevailing at the dates of the transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities 13 transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, other than investments in securities, resulting from changes in the exchange rates. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Capital gains realized on some foreign securities are subject to foreign taxes, which are accrued as applicable. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net assets of the respective classes. Distribution and service fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rate(s) applicable to each class. Expenses The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. Forward foreign currency exchange contracts The Fund may enter into forward foreign currency exchange contracts as a hedge against the effect of fluctuations in currency exchange rates. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date at a set price. The aggregate principal amounts of the contracts are marked to market daily at the applicable foreign currency exchange rates. Any resulting unrealized gains and losses are included in the determination of the Fund's daily net assets. The Fund records realized gains and losses at the time the forward foreign currency exchange contracts are closed out. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. These contracts involve market or credit risk in excess of the unrealized gain or loss reflected in the Fund's Statement of Assets and Liabilities. The Fund may also purchase and sell forward contracts to facilitate the settlement of foreign currency denominated portfolio transactions, under which it intends to take delivery of the foreign currency. Such contracts normally involve no market risk if they are offset by the currency amount of the underlying transactions. The Fund had no open forward foreign currency exchange contracts on April 30, 2003. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $728,552 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carryforward expires as follows: October 31, 2009 - $271,490 and October 31, 2010 - $457,062. 14 Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend date. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a monthly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 1.00% of the first $500,000,000 of the Fund's average daily net asset value, (b) 0.90% of the next $500,000,000 and (c) 0.85% of the Fund's average daily net asset value in excess of $1,000,000,000. The Adviser has a subadvisory agreement with Nicholas-Applegate Capital Management LP. The Fund is not responsible for payment of the subadvisory fees. The Adviser has agreed to limit the Fund's expenses, excluding the distribution and service fees, to 1.30% of the Fund's average daily net assets, at least until February 28, 2004. Accordingly, the expense reduction amounted to $41,782 for the period ended April 30, 2003. The Adviser reserves the right to terminate this limitation in the future. The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net assets and 1.00% of Class B and Class C average daily net assets. A maximum of 0.25% of such payments may be service fees as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Class A and Class C shares are assessed up-front sales charges. During the period ended April 30, 2003, JH Funds received no up-front sales charges with regard to Class A and Class C shares. Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or 15 the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used in whole or in part to defray its expenses for providing distribution related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2003, JH Funds received no CDSCs with regard to Class B and Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of John Hancock Life Insurance Company ("JHlLCo"). The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses. The Adviser and other subsidiaries of JHLICo owned 300,000 shares of beneficial interest of the Fund on April 30, 2003. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.03% of the average net assets of the Fund. Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund's deferred compensation liability are recorded on the Fund's books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investments as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund. NOTE C Fund share transactions The Fund had no shares sold and repurchased during the last two periods. The Fund has an unlimited number of shares authorized with no par value. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2003, aggregated $1,089,747 and $1,042,429, respectively The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $2,104,087. Gross unrealized appreciation and depreciation of investments aggregated $235,671 and $88,945, respectively, resulting in net unrealized appreciation of $146,726. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on wash sales. NOTE E Subsequent events On June 23, 2003, the Trustees approved the liquidation of the Fund. 16 John Hancock International Small Cap Growth Fund Trustees Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove John M. DeCiccio Richard A. Farrell Maureen R. Ford William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt * Members of the Audit Committee Officers Maureen R. Ford Chairman, President and Chief Executive Officer William L. Braman Executive Vice President and Chief Investment Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer Thomas H. Connors Vice President and Compliance Officer Investment Adviser John Hancock Advisers, LLC. 101 Huntington Avenue Boston, Massachusetts 02199-7603 Principal Distributor John Hancock Funds, LLC. 101 Huntington Avenue Boston, Massachusetts 02199-7603 Transfer Agent John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 Legal Counsel Hale and Dorr 60 State Street Boston, Massachusetts 02109-1803 - -------------------------------------------------------------------------------- SEMI ANNUAL REPORT John Hancock Consumer Industries Fund APRIL 30, 2003 - -------------------------------------------------------------------------------- John Hancock Consumer Industries Fund Schedule of Investments April 30, 2003 (unaudited) - -------------------------------------------------------------------------------- ISSUER SHARES VALUE - ------ ------ ----- COMMON STOCKS Automobiles / Trucks (3.09%) Thor Industries, Inc. 2,600 $ 83,148 ---------- Beverages (3.45%) Anheuser-Busch Cos., Inc. 1,050 52,374 Coca-Cola Co. (The) 1,000 40,400 ---------- 92,774 ---------- Computers (1.98%) Electronic Arts, Inc.* 900 53,343 ---------- Cosmetics & Personal Care (5.01%) Estee Lauder Cos., Inc. (The) (Class A) 1,800 58,500 Procter & Gamble Co. (The) 850 76,373 ---------- 134,873 ---------- Diversified Operations (2.13%) General Electric Co. 1,950 57,428 ---------- Food (12.29%) American Italian Pasta Co. (Class A)* 850 37,485 Dean Foods Co.* 1,100 47,883 Del Monte Foods Co.* 3,500 27,825 Horizon Organic Holding Corp.* 4,250 58,650 Peet's Coffee & Tea, Inc.* 2,200 37,422 Ralcorp Holdings, Inc.* 1,350 33,615 United Natural Foods, Inc.* 2,300 67,137 Whole Foods Market, Inc.* 350 20,776 ---------- 330,793 ---------- Household (0.46%) Tupperware Corp. 900 12,474 ---------- Leisure (2.05%) Callaway Golf Co. 2,050 28,556 Harley-Davidson, Inc. 600 26,664 ---------- 55,220 ---------- Media (5.32%) Clear Channel Communications, Inc.* 900 35,199 Entercom Communications Corp.* 500 24,295 NetFlix, Inc.* 1,200 27,480 Thomson Corp. (The) (Canada) 950 27,987 Viacom, Inc. (Class A)* 650 28,223 ---------- 143,184 ---------- See notes to financial statements 1 ISSUER SHARES VALUE - ------ ------ ----- Medical (2.20%) NBTY, Inc.* 1,250 $ 19,375 Weight Watchers International, Inc.* 850 39,933 ---------- 59,308 ---------- Retail (56.18%) 99 Cents Only Stores* 1,783 52,527 A.C. Moore Arts & Crafts, Inc.*+ 5,450 93,903 Abercrombie & Fitch Co. (Class A)* 1,650 54,252 Amazon.com, Inc.* 900 25,803 Applebee's International, Inc. 2,850 78,090 AutoZone, Inc.* 500 40,405 Bed Bath & Beyond, Inc.* 500 19,755 Best Buy Co., Inc.* 900 31,122 Coach, Inc.* 625 27,194 Columbia Sportswear Co.* 1,300 62,413 Cost Plus, Inc.* 2,800 86,044 Costco Wholesale Corp. 850 29,435 Darden Restaurants, Inc. 2,475 43,337 Family Dollar Stores, Inc. 2,000 68,380 Fred's, Inc. 1,000 32,450 Hollywood Entertainment Corp.* 4,900 86,975 Hot Topic, Inc.* 3,200 78,240 Kohl's Corp.* 800 45,440 Lowe's Cos., Inc. 1,000 43,890 Panera Bread Co.* 2,450 83,374 Quiksilver, Inc. * 1,600 52,160 RARE Hospitality International, Inc.* 2,600 75,738 Staples, Inc.* 2,050 39,032 Tiffany & Co. 2,900 80,446 Urban Outfitters, Inc.* 1,450 43,239 Walgreen Co. 1,650 50,919 Wal-Mart Stores, Inc. 1,550 87,296 ---------- 1,511,859 ---------- Schools / Education (0.81%) Apollo Group, Inc. (Class A)* 400 21,680 ---------- TOTAL COMMON STOCKS (94.97%) (Cost $2,294,785) 2,556,084 ---------- See notes to financial statements. 2
INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS Joint Repurchase Agreement (5.50%) Investment in a joint repurchase agreement transaction with State Street Bank & Trust Co. - Dated 04-30-03, due 05-01-03 (Secured by U.S. Treasury Inflation Indexed Bond, 3.875% due 04-15-29 and U.S. Treasury Inflation Indexed Notes, 3.000% thru 3.875%, due 01-15-07 thru 07-15-12) 1.28 % $ 148 $ 148,000 ------------ SHARES Cash Equivalents (2.54%) AIM Cash Investment Trust** 68,422 68,422 ------------ TOTAL SHORT-TERM INVESTMENTS (8.04%) (Cost $216,422) 216,422 ------------ TOTAL INVESTMENTS (103.01%) 2,772,506 ------------ OTHER ASSETS AND LIABILITIES, NET (3.01%) (81,121) ------------ TOTAL NET ASSETS (100.00%) $ 2,691,385 ============
* Non-income producing security. ** Represents investment of security lending collateral. + All or a portion of this security is on loan on April 30, 2003. Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer. The percentage shown for each investment category is the total of that category as a percentage of the net assets of the Fund. See notes to financial statements. 3 John Hancock Consumer Industries Fund April 30, 2003 (unaudited) ASSETS AND ASSETS LIABILITIES Investments at value (cost $2,511,207) including $67,197 of securities loaned $2,772,506 Cash 300 Dividends and interest receivable 478 Other assets 14 Total assets 2,773,298 LIABILITIES Payable for securities on loan 68,422 Payable to affiliates 457 Other payables and accrued expenses 13,034 Total liabilities 81,913 NET ASSETS Capital paid-in 2,964,485 Accumulated net realized loss on investments (520,805) Net unrealized appreciation of investments 261,299 Accumulated net investment loss (13,594) Net assets $2,691,385 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($2,638,068 / 294,000 shares) $8.97 Class B ( $26,659 / 3,000 shares) $8.89 Class C ( $26,659 / 3,000 shares) $8.89 MAXIMUM OFFERING PRICE PER SHARE Class A (1) ($8.97 / 95%) $9.44 Class C ($8.89 / 99%) $8.98
(1) On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. 4 John Hancock Consumer Industries Fund OPERATIONS INVESTMENT INCOME For the period ended Dividends (net of foreign withholding taxes of $6) $4,739 April 30, 2003 (unaudited) (1) Interest (including securities lending income of $48) 848 Total investment income 5,587 EXPENSES Investment management fee 10,458 Class A distribution and service fee 3,618 Class B distribution and service fee 91 Class C distribution and service fee 91 Printing 5,632 Auditing fee 4,959 Custodian fee 4,374 Registration and filing fee 1,893 Accounting and legal services fee 331 Trustees' fee 75 Legal fee 13 Total expenses 31,535 Less expense reductions (12,356) Net expenses 19,179 Net investment loss (13,592) REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on investments (74,876) Change in net unrealized appreciation (depreciation) of investments 216,160 Net realized and unrealized gain 141,284 Increase in net assets from operations $127,692
(1) Semiannual period from 11-1-02 through 4-30-03. See notes to financial statements. 5 John Hancock Consumer Industries Fund
YEAR ENDED PERIOD ENDED 10-31-02 4-30-03 (1) CHANGES IN INCREASE (DECREASE) IN NET ASSETS NET ASSETS From operations Net investment loss ($27,104) ($13,592) Net realized loss (285,960) (74,876) Change in net unrealized appreciation (depreciation) 212,081 216,160 Increase (decrease) in net assets resulting from operations (100,983) 127,692 Distributions to shareholders Class A (5,424) -- NET ASSETS Beginning of period 2,670,100 2,563,693 End of period (2) $2,563,693 $2,691,385
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited. (2) Includes accumulated net investment loss of $2 and $13,594, respectively. See notes to financial statements. 6 John Hancock Consumer Industries Fund Financial Highlights CLASS A SHARES
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $8.90 $8.55 Net investment loss (3) (0.01) (0.09) (0.04) Net realized and unrealized gain (loss) on investments (1.09) (0.24) 0.46 Total from investment operations (1.10) (0.33) 0.42 Less distributions From net investment income -- (0.02) -- Net asset value, end of period $8.90 $8.55 $8.97 Total return(4,5)(%) (11.00)(6) (3.75) 4.91(6) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $3 $3 $3 Ratio of expenses to average net assets(%) 1.55(7) 1.55 1.55(7) Ratio of adjusted expenses to average net assets(8)(%) 3.04(7) 2.64 2.55(7) Ratio of net investment loss to average net assets(%) (0.14)(7) (0.95) (1.10)(7) Portfolio turnover(%) 121 157 62
See notes to financial statements. 7 John Hancock Consumer Industries Fund Financial Highlights CLASS B SHARES
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $8.86 $8.48 Net investment loss(3) (0.06) (0.13) (0.06) Net realized and unrealized gain (loss) on investments (1.08) (0.25) 0.47 Total from investment operations (1.14) (0.38) 0.41 Net asset value, end of period $8.86 $8.48 $8.89 Total return(4,5)(%) (11.40)(6) (4.29) 4.83(6) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) --(9) --(9) --(9) Ratio of expenses to average net assets(%) 2.25(7) 2.02 2.00(7) Ratio of adjusted expenses to average net assets(8)(%) 3.74(7) 3.11 3.00(7) Ratio of net investment loss to average net assets (%) (0.84)(7) (1.42) (1.54)(7) Portfolio turnover(%) 121 157 62
See notes to financial statements. 8 John Hancock Consumer Industries Fund Financial Highlights CLASS C SHARES PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $8.86 $8.48 Net investment loss(3) (0.06) (0.13) (0.06) Net realized and unrealized gain (loss) on investments (1.08) (0.25) 0.47 Total from investment operations (1.14) (0.38) 0.41 Net asset value, end of period $8.86 $8.48 $8.89 Total return(4,5)(%) (11.40)(6) (4.29) 4.83(6) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) --(9) --(9) --(9) Ratio of expenses to average net assets(%) 2.25(7) 2.02 2.00(7) Ratio of adjusted expenses to average net assets(8)(%) 3.74(7) 3.11 3.00(7) Ratio of net investment loss to average net assets(%) (0.84)(7) (1.42) (1.54)(7) Portfolio turnover(%) 121 157 62
(1) Class A, Class B, and Class C shares began operations on 3-1-01. (2) Semiannual period from 11-1-02 through 4-30-03. Unaudited. (3) Based on the average of the shares outstanding. (4) Assumes dividend reinvestment and does not reflect the effect of sales charges. (5) Total returns would have been lower had certain expenses not been reduced during the periods shown. (6) Not annualized. (7) Annualized. (8) Does not take into consideration expense reductions during the periods shown. (9) Less than $500,000. See notes to financial statements. 9 NOTES TO FINANCIAL STATEMENTS Unaudited NOTE A Accounting policies John Hancock Consumer Industries Fund (the "Fund") is a non-diversified series of John Hancock World Fund, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to achieve long term capital appreciation. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B and Class C shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund are as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. Investments in AIM Cash Investment Trust are valued at their net asset value each business day. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net assets of the respective classes. Distribution and service fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rate(s) applicable to each class. Expenses The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. 10 Securities lending The Fund may lend securities to certain qualified brokers who pay the Fund negotiated lender fees. These fees are included in interest income. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. As with other extensions of credit, the Fund may bear the risk of delay of the loaned securities in recovery or even loss of rights in the collateral, should the borrower of the securities fail financially. On April 30, 2003, the Fund loaned securities having a market value of $67,197 collateralized by cash in the amount of $68,422. The cash collateral was invested in a short-term instrument. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $443,618 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carryforward expires as follows: October 31, 2009 - $114,047 and October 31, 2010 - $329,571. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a monthly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.85% of the first $500,000,000 of the Fund's average daily net asset value, (b) 0.80% of the next $500,000,000 and (c) 0.75% in excess of $1,000,000,000. The Adviser has agreed to limit the Fund's expenses, excluding the distribution and service fees, to 1.25% of the Fund's average daily net assets, at least until February 28, 2004. Accordingly, the expense reduction amounted to $12,356 for the period ended April 30, 2003. The Adviser reserves the right to terminate this limitation in the future. 11 The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net assets and 1.00% of Class B and Class C average daily net assets. A maximum of 0.25% of such payments may be service fees as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Class A and Class C shares are assessed up-front sales charges. During the period ended April 30, 2003, JH Funds received no up-front sales charges with regard to sales of Class A and Class C shares. Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used in whole or in part to defray its expenses for providing distribution related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2003, JH Funds received no CDSCs with regard to Class B and Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of John Hancock Life Insurance Company ("JHLICo"). The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.03% of the average net assets of the Fund. The Adviser and other subsidiaries of JHLICo owned 300,000 shares of beneficial interest of the Fund on April 30, 2003. Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund's deferred compensation liability are recorded on the Fund's books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investment as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund. NOTE C Fund share transactions The Fund has an unlimited number of shares authorized with no par value. 12 NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2003, aggregated $1,518,005 and $1,459,115, respectively. The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $2,513,672. Gross unrealized appreciation and depreciation of investments aggregated $336,241 and $77,407, respectively, resulting in net unrealized appreciation of $258,834. The difference between book basis and tax basis net unrealized appreciation of investments is attributable primarily to the tax deferral of losses on wash sales. NOTE E Subsequent events On May 20, 2003, the Trustees approved the liquidation of the Fund after the close of business on May 7, 2003. 13 John Hancock Funds - Consumer Industries Fund Trustees Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove John M. DeCiccio Richard A. Farrell Maureen R. Ford William F. Glavin* Dr. John A. Moore* Patti McGill Peterson* John W. Pratt * Members of the Audit Committee Officers Maureen R. Ford Chairman, President and Chief Executive Officer William L. Braman Executive Vice President and Chief Investment Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer Thomas H. Connors Vice President and Compliance Officer Investment Adviser John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 Principal Distributor John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 Custodian The Bank of New York One Wall Street New York, New York 10286 Transfer Agent John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 Legal Counsel Hale and Dorr 60 State Street Boston, Massachusetts 02109-1803 14 - -------------------------------------------------------------------------------- SEMI ANNUAL REPORT John Hancock Communications Fund APRIL 30, 2003 - -------------------------------------------------------------------------------- John Hancock Communications Fund Schedule of Investments April 30, 2003 (Unaudited) - -------------------------------------------------------------------------------- ISSUER SHARES VALUE COMMON STOCKS Advertising (3.34%) Omnicom Group, Inc. 700 $ 43,330 --------- Computers (9.30%) Cisco Systems, Inc.* 2,100 31,584 Emulex Corp.* 1,100 22,539 Hewlett-Packard Co. 1,600 26,080 Lexmark International, Inc.* 300 22,353 McDATA Corp. (Class A)* 1,700 17,986 --------- 120,542 --------- Electronics (14.27%) Intersil Corp. (Class A)* 1,500 27,750 L-3 Communications Holdings, Inc.* 900 39,960 QLogic Corp.* 700 30,793 Silicon Laboratories, Inc.* 850 24,183 Texas Instruments, Inc. 2,200 40,678 Xilinx, Inc.* 800 21,656 --------- 185,020 --------- Fiber Optics (4.06%) JDS Uniphase Corp.* 16,300 52,649 --------- Media (38.02%) Clear Channel Communications, Inc.* 1,600 62,576 Comcast Corp. (Class A)* 3,941 125,757 Comcast Corp. (Special Class A)* 1,400 42,084 EchoStar Communications Corp. (Class A)* 1,700 50,932 Fox Entertainment Group, Inc. (Class A)* 1,600 40,640 Harte-Hanks, Inc. 900 16,200 New York Times Co. (The) (Class A) 600 27,828 Univision Communications, Inc. (Class A)* 1,900 57,532 USA Interactive* 1,300 38,935 Viacom, Inc. (Class B)* 700 30,387 --------- 492,871 --------- Printing - Commercial (2.05%) Valassis Communications, Inc.* 1,000 26,600 --------- Telecommunications (25.12%) BellSouth Corp. 1,100 28,039 Level 3 Communications, Inc.*+ 6,000 34,320 Motorola, Inc. 5,200 41,132 Nextel Communications, Inc. (Class A)* 1,900 28,101 Nokia Corp., American Depositary Receipt (ADR) (Finland) 4,211 69,776 QUALCOMM, Inc.* 1,200 38,268 Verizon Communications, Inc. 2,300 85,974 --------- 325,610 --------- Utilities (2.89%) ALLTEL Corp. 800 37,488 --------- TOTAL COMMON STOCKS (99.05%) (Cost $1,326,221) 1,284,110 --------- See notes to financial statements. 1
INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY DATE RATE (000s OMITTED) VALUE SHORT-TERM INVESTMENTS Joint Repurchase Agreement (1.46%) Investment in a joint repurchase agreement transaction with State Street Bank & Trust Co. - Dated 04-30-03, due 05-01-03 (Secured by U.S. Treasury Inflation Indexed Bond, 3.875% due 04-15-29 and U.S. Treasury Inflation Indexed Notes, 3.000% thru 3.875%, due 01-15-07 thru 07-15-12) 1.28 % $ 19 $ 19,000 ------------ SHARES Cash Equivalents (2.65%) AIM Cash Investment Trust** 34,303 34,303 ------------ TOTAL SHORT-TERM INVESTMENTS (4.11%) (Cost $53,303) 53,303 ------------ TOTAL INVESTMENTS (103.16%) 1,337,413 ------------ OTHER ASSETS AND LIABILITIES, NET (3.16%) (41,058) ------------ TOTAL NET ASSETS (100.00%) $ 1,296,355 ============
* Non-income producing security. ** Represents investment of security lending collateral. + All or a portion of this security is on loan on April 30, 2003. Parenthetical disclosure of a foreign country in the security description represents country of a foreign issuer. The percentage shown for each investment category is the total of that category as a percentage of the net assets of the Fund. See notes to financial statements. 2 John Hancock Communications Fund ASSETS AND ASSETS LIABILITIES Investments at value (cost - $1,379,524) including $33,748 of securities loaned $1,337,413 April 30, 2003 (unaudited) Cash 95 Dividends and interest receivable 1,755 Receivable from affiliates 1,841 Other assets 9 Total assets 1,341,113 LIABILITIES Payable for securities on loan 34,303 Other payables and accrued expenses 10,455 Total liabilities 44,758 NET ASSETS Capital paid-in 2,989,986 Accumulated net realized loss on investments (1,650,758) Net unrealized depreciation of investments (42,111) Accumulated net investment loss (762) Net assets $1,296,355 NET ASSET VALUE PER SHARE Based on net asset values and shares outstanding Class A ($1,270,613 / 294000 shares) $4.32 Class B ( $12,871 / 3000 shares) $4.29 Class C ( $12,871 / 3000 shares) $4.29 MAXIMUM OFFERING PRICE PER SHARE Class A(1) ( $4.32 / 95%) $4.55 Class C ( $4.29 / 99%) $4.33
(1) On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. See notes to financial statements. 3 John Hancock Communications Fund OPERATIONS INVESTMENT INCOME For the period ended Dividends (net of foreign withholding taxes of $192) $7,458 April 30, 2003 (unaudited)(1) Securities lending income 1,578 Interest 207 Total investment income 9,243 EXPENSES Investment management fee 5,596 Class A distribution and service fee 1,828 Class B distribution and service fee 46 Class C distribution and service fee 46 Printing 6,289 Auditing fee 4,959 Custodian fee 4,242 Registration and filing fee 1,893 Accounting and legal services fee 167 Trustees' fee 39 Miscellaneous 35 Transfer agent fee 10 Legal fee 8 Total expenses 25,158 Less expense reductions (15,154) Net expenses 10,004 Net investment loss (761) REALIZED AND UNREALIZED GAIN (LOSS) Net realized loss on investments (218,253) Change in net unrealized appreciation (depreciation) of investments 267,007 Net realized and unrealized gain 48,754 Increase in net assets from operations $47,993
(1) Semiannual period from 11-1-02 through 4-30-03. See notes to financial statements. 4 John Hancock Communications Fund
YEAR ENDED PERIOD ENDED 10-31-02 4-30-03(1) CHANGES IN INCREASE (DECREASE) IN NET ASSETS NET ASSETS From operations Net investment loss ($1,878) ($761) Net realized loss (867,565) (218,253) Change in net unrealized appreciation (depreciation) 42,870 267,007 Increase (decrease) in net assets resulting from operations (826,573) 47,993 Distributions to shareholders From net investment income Class A (5,627) -- From Fund share transactions (47) -- NET ASSETS Beginning of period 2,080,609 1,248,362 End of period(2) $1,248,362 $1,296,355
(1) Semiannual period from 11-1-02 through 4-30-03. Unaudited. (2) Includes accumulated net investment loss of $1 and $762, respectively. See notes to financial statements. 5 John Hancock Communications Fund Financial Highlights CLASS A
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $6.94 $4.16 Net investment loss(3) (0.01) (0.01) --(4) Net realized and unrealized gain (loss) on investments (3.05) (2.75) 0.16 Total from investment operations (3.06) (2.76) 0.16 Less distributions From net investment income -- (0.02) -- Net asset value, end of period $6.94 $4.16 $4.32 Total return(5,6)(%) (30.60)(7) (39.90) 3.85(7) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) $2 $1 $1 Ratio of expenses to average net assets (%) 1.60(8) 1.60 1.60(8) Ratio of adjusted expenses to average net assets(9)(%) 3.99(8) 3.19 4.04(8) Ratio of net investment loss to average net assets(%) (0.23)(8) (0.10) (0.11)(8) Portfolio turnover(%) 81 119 73
See notes to financial statements. 6 John Hancock Communications Fund Financial Highlights CLASS B
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $6.92 $4.14 Net investment loss(3) (0.03) (0.03) (0.01) Net realized and unrealized gain (loss) on investments (3.05) (2.75) 0.16 Total from investment operations (3.08) (2.78) 0.15 Net asset value, end of period $6.92 $4.14 $4.29 Total return(5,6)(%) (30.80)(7) (40.17) 3.62(7) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in millions) --(10) --(10) --(10) Ratio of expenses to average net assets (%) 2.30(8) 2.08 2.05(8) Ratio of adjusted expenses to average net assets(9)(%) 4.69(8) 3.67 4.49(8) Ratio of net investment loss to average net assets(%) (0.93)(8) (0.58) (0.56)(8) Portfolio turnover(%) 81 119 73
See notes to financial statements. 7 John Hancock Communications Fund Financial Highlights CLASS C
PERIOD ENDED 10-31-01(1) 10-31-02 4-30-03(2) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.00 $6.92 $4.14 Net investment loss(3) (0.03) (0.03) (0.01) Net realized and unrealized gain(loss) on investments (3.05) (2.75) 0.16 Total from investment operations (3.08) (2.78) 0.15 Net asset value, end of period $6.92 $4.14 $4.29 Total return(5,6)(%) (30.80)(7) (40.17) 3.62(7) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period(in millions) --(10) --(10) --(10) Ratio of expenses to average net assets(%) 2.30(8) 2.08 2.05(8) Ratio of adjusted expenses to average net assets(9)(%) 4.69(8) 3.67 4.49(8) Ratio of net investment loss to average net assets(%) (0.93)(8) (0.58) (0.56)(8) Portfolio turnover(%) 81 119 73
(1) Class A, Class B and Class C shares began operations on 6-1-01. (2) Semiannual period from 11-1-02 through 4-30-03. Unaudited. (3) Based on the average of the shares outstanding. (4) Less than $0.01 per share. (5) Assumes dividend reinvestment and does not reflect the effect of sales charges. (6) Total returns would have been lower had certain expenses not been reduced during the periods shown. (7) Not annualized. (8) Annualized. (9) Does not take into consideration expense reductions during the periods shown. (10) Less than $500,000. See notes to financial statements. 8 NOTES TO FINANCIAL STATEMENTS Unaudited NOTE A Accounting policies John Hancock Communications Fund (the "Fund") is a non-diversified series of John Hancock World Fund, an open-end management investment company registered under the Investment Company Act of 1940. The investment objective of the Fund is to seek long-term capital appreciation. The Trustees have authorized the issuance of multiple classes of shares of the Fund, designated as Class A, Class B and Class C shares. The shares of each class represent an interest in the same portfolio of investments of the Fund and have equal rights as to voting, redemptions, dividends and liquidation, except that certain expenses, subject to the approval of the Trustees, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class that bears distribution and service expenses under terms of a distribution plan have exclusive voting rights to that distribution plan. Significant accounting policies of the Fund were as follows: Valuation of investments Securities in the Fund's portfolio are valued on the basis of market quotations, valuations provided by independent pricing services or at fair value as determined in good faith in accordance with procedures approved by the Trustees. Short-term debt investments maturing within 60 days are valued at amortized cost, which approximates market value. Investments in AIM Cash Investment Trust are valued at their net asset value each business day. Joint repurchase agreement Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Fund, along with other registered investment companies having a management contract with John Hancock Advisers, LLC (the "Adviser"), a wholly owned subsidiary of The Berkeley Financial Group, LLC, may participate in a joint repurchase agreement transaction. Aggregate cash balances are invested in one or more large repurchase agreements, whose underlying securities are obligations of the U.S. government and/or its agencies. The Fund's custodian bank receives delivery of the underlying securities for the joint account on the Fund's behalf. The Adviser is responsible for ensuring that the agreement is fully collateralized at all times. Investment transactions Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and losses on sales of investments are determined on the identified cost basis. Class allocations Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the appropriate net assets of the respective classes. Distribution and service fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rate(s) applicable to each class. Expenses The majority of the expenses are directly identifiable to an individual fund. Expenses that are not readily identifiable to a specific fund will be allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the funds. 9 Securities lending The Fund may lend securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. As with other extensions of credit, the Fund may bear the risk of delay of the loaned securities in recovery or even loss of rights in the collateral, should the borrower of the securities fail financially. On April 30, 2003, the Fund loaned securities having a market value of $33,748 collateralized by cash in the amount of $34,303. The cash collateral was invested in a short-term instrument. Federal income taxes The Fund qualifies as a "regulated investment company" by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required. For federal income tax purposes, the Fund has $1,426,509 of a capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. To the extent that such carryforward is used by the Fund, no capital gain distributions will be made. The loss carryforward expires as follows: October 31, 2009 - $558,949 and October 31, 2010 - $867,560. Dividends, interest and distributions Dividend income on investment securities is recorded on the ex-dividend date or, in the case of some foreign securities, on the date thereafter when the Fund identifies the dividend. Interest income on investment securities is recorded on the accrual basis. Foreign income may be subject to foreign withholding taxes, which are accrued as applicable. The Fund records distributions to shareholders from net investment income and net realized gains on the ex-dividend date. Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and are in the same amount, except for the effect of expenses that may be applied differently to each class. Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Distributions in excess of tax basis earnings and profits, if any, are reported in the Fund's financial statements as a return of capital. Use of estimates The preparation of these financial statements, in accordance with accounting principles generally accepted in the United States of America, incorporates estimates made by management in determining the reported amount of assets, liabilities, revenues and expenses of the Fund. Actual results could differ from these estimates. NOTE B Management fee and transactions with affiliates and others The Fund has an investment management contract with the Adviser. Under the investment management contract, the Fund pays a monthly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 0.90% of the first $500,000,000 of the Fund's average daily net asset value (b) 0.85% of the next $500,000,000 and (c) 0.80% of the Fund's average daily net asset value in excess of $1,000,000,000. The Adviser has agreed to limit the Fund's expenses, excluding distribution and service fees, to 1.30% of the Fund's average daily net assets, at least until February 28, 2004. Accordingly, the expense reduction amounted to $15,154 for the period ended April 30, 2003. The Adviser reserves the right to terminate this limitation in the future. 10 The Fund has Distribution Plans with John Hancock Funds, LLC ("JH Funds"), a wholly owned subsidiary of the Adviser. The Fund has adopted Distribution Plans with respect to Class A, Class B and Class C pursuant to Rule 12b-1 under the Investment Company Act of 1940 to reimburse JH Funds for the services it provides as distributor of shares of the Fund. Accordingly, the Fund makes monthly payments to JH Funds at an annual rate not to exceed 0.30% of Class A average daily net assets and 1.00% of Class B and Class C average daily net assets. A maximum of 0.25% of such payments may be service fees as defined by the Conduct Rules of the National Association of Securities Dealers. Under the Conduct Rules, curtailment of a portion of the Fund's 12b-1 payments could occur under certain circumstances. Class A and Class C shares are assessed up-front sales charges. During the period ended April 30, 2003, JH Funds received no up-front sales charges with regard to sales of Class A and Class C shares. Class B shares that are redeemed within six years of purchase are subject to a contingent deferred sales charge ("CDSC") at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a CDSC at a rate of 1.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from the CDSCs are paid to JH Funds and are used in whole or in part to defray its expenses for providing distribution related services to the Fund in connection with the sale of Class B and Class C shares. During the period ended April 30, 2003, JH Funds received no CDSCs with regard to Class B and Class C shares. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc., an indirect subsidiary of John Hancock Life Insurance Company ("JHLICo"). The Fund pays a monthly transfer agent fee at an annual rate of 0.05% of the average daily net asset value, plus a fee based on the number of shareholder accounts and reimbursement for certain out-of-pocket expenses. The Fund has an agreement with the Adviser to perform necessary tax, accounting and legal services for the Fund. The compensation for the period was at an annual rate of approximately 0.03% of the average net assets of the Fund. The Adviser and other subsidiaries of JHLICo owned 300,000 shares of beneficial interest of the Fund on April 30, 2003. Ms. Maureen R. Ford and Mr. John M. DeCiccio are directors and/or officers of the Adviser and/or its affiliates, as well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne by the Fund. The unaffiliated Trustees may elect to defer for tax purposes their receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan. The Fund makes investments into other John Hancock funds, as applicable, to cover its liability for the deferred compensation. Investments to cover the Fund's deferred compensation liability are recorded on the Fund's books as an other asset. The deferred compensation liability and the related other asset are always equal and are marked to market on a periodic basis to reflect any income earned by the investment as well as any unrealized gains or losses. The Deferred Compensation Plan investments had no impact on the operations of the Fund. NOTE C Fund share transactions This listing illustrates the number of Fund shares sold and repurchased during the last two periods, along with the corresponding dollar value. The Fund has an unlimited number of shares authorized with no par value. 11 YEAR ENDED 10-31-02(1) PERIOD ENDED 4-30-03(1) SHARES AMOUNT SHARES AMOUNT CLASS A SHARES Repurchased (6) ($47) -- -- Net decrease (6) ($47) -- -- NET DECREASE (6) ($47) -- -- (1) Semiannual period from 11-1-02 through 4-30-03. Unaudited. NOTE D Investment transactions Purchases and proceeds from sales or maturities of securities, other than short-term securities and obligations of the U.S. government, during the period ended April 30, 2003, aggregated $918,097 and $894,139, respectively. The cost of investments owned on April 30, 2003, including short-term investments, for federal income tax purposes was $1,379,524. Gross unrealized appreciation and depreciation of investments aggregated $84,526 and $126,637, respectively, resulting in net unrealized depreciation of $42,111. NOTE E Subsequent events On May 20, 2003, the Trustees approved the liquidation of the Fund after the close of business on May 7, 2003. NOTE F Subsequent events On May 20, 2003, the Trustees voted to terminate the Fund after the close of business on May 20, 2003. 12 John Hancock Funds - Communications Fund Trustees Dennis S. Aronowitz Richard P. Chapman, Jr. William J. Cosgrove John M. DeCiccio Richard A. Farrell Maureen R. Ford William F. Glavin * Dr. John A. Moore * Patti McGill Peterson * John W. Pratt * Members of the Audit Committee Officers Maureen R. Ford Chairman, President and Chief Executive Officer William L. Braman Executive Vice President and Chief Investment Officer Richard A. Brown Senior Vice President and Chief Financial Officer Susan S. Newton Senior Vice President and Secretary William H. King Vice President and Treasurer Thomas H. Connors Vice President and Compliance Officer Investment Adviser John Hancock Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 Principal Distributor John Hancock Funds, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603 Custodian The Bank of New York One Wall Street New York, New York 10286 Transfer Agent John Hancock Signature Services, Inc. 1 John Hancock Way, Suite 1000 Boston, Massachusetts 02217-1000 Legal Counsel Hale and Dorr 60 State Street Boston, Massachusetts 02109-1803 ITEM 2. CODE OF ETHICS. Not applicable at this time. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable at this time. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable at this time. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable at this time. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this amended Form N-CSR, the registrant's principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. ITEM 10. EXHIBITS. (a) Not applicable at this time. (b)(1) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached as Ex99.CERT. (b)(2) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached as Ex99.CERT. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. By: ----------------------- Maureen R. Ford Chairman, President and Chief Executive Officer Date: June 30, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: ----------------------- Maureen R. Ford Chairman, President and Chief Executive Officer Date: June 30, 2003 By: ----------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Date: June 30, 2003 EX-99.CERT 3 certification.txt CERTIFICATION - AMENDED CERTIFICATION I, Maureen R. Ford, certify that 1. I have reviewed this report on amended Form N-CSR of the John Hancock World Fund (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of trustees: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: _____________ _________________________ Maureen R. Ford Chairman, President and Chief Executive Officer CERTIFICATION I, Richard A. Brown, certify that 1. I have reviewed this report on amended Form N-CSR of the John Hancock World Fund (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of trustees: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: _____________ _________________________ Richard A. Brown Senior Vice President and Chief Financial Officer EX-99.CERT 4 certification906.txt CERTIFICATION - AMENDED Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the attached Report of John Hancock World Fund (the "registrant") on amended Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the registrant does hereby certify that, to the best of such officer's knowledge: 1. The Report fully complies with the requirements of 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant as of, and for, the periods presented in the Report. - ----------------------- Maureen R. Ford Chairman, President and Chief Executive Officer Dated: June 30, 2003 - ----------------------- Richard A. Brown Senior Vice President and Chief Financial Officer Dated: June 30, 2003 A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----